-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HThRSYGq3LuRtXMzC8MU2jCslvfiB4H5RWjNkRl/2URpEe5K0orYDQp/1pTPgGyS XKcgUpYIkkoE9+FHq7Xrtg== 0000950153-96-001032.txt : 19961212 0000950153-96-001032.hdr.sgml : 19961212 ACCESSION NUMBER: 0000950153-96-001032 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 44 CONFORMED PERIOD OF REPORT: 19961126 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961211 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICA WEST AIRLINES INC CENTRAL INDEX KEY: 0000706270 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 860418245 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12337 FILM NUMBER: 96679109 BUSINESS ADDRESS: STREET 1: 4000 E SKY HARBOR BLVD STREET 2: STE 2100 CITY: PHOENIX STATE: AZ ZIP: 85034 BUSINESS PHONE: 6026930800 MAIL ADDRESS: STREET 1: 4000 EAST SKY HARBOR BLVD STREET 2: STE 2100 CITY: PHOENIX STATE: AZ ZIP: 85034 8-K 1 FORM 8-K FOR AMERICA WEST AIRLINES, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: November 26, 1996 (Date of earliest event reported) AMERICA WEST AIRLINES, INC. (Exact name of Registrant as specified in its charter) Delaware 333-14691 86-0418245 (State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.) 4000 East Sky Harbor Boulevard Phoenix, Arizona 85034 (Address of Principal executive offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (602) 693-0800 2 Item 5. Other Events. Reference is hereby made to the Registrant's Registration Statement on Form S-3 (File No. 333-14691) filed with the Securities and Exchange Commission (the "Commission") on October 23, 1996, as amended by Amendment No. 1 thereto filed with the Commission on November 8, 1996, and as further amended by Amendment No. 2 thereto filed with the Commission on November 20, 1996 (collectively, the "Registration Statement"), pursuant to which the Registrant registered $230,000,000 aggregate principal amount of America West Airlines 1996-1 Pass Through Trusts Pass Through Certificates, Series 1996-1 (the "Certificates") for sale in accordance with the provisions of the Securities Act of 1933, as amended. Reference is also hereby made to the Prospectus dated November 22, 1996 (the "Prospectus"), which has been filed with the Commission pursuant to Rule 424(b)(5), with respect to the Certificates. On November 26, 1996, $218,557 of the Certificates were issued by the America West Airlines 1996-1 Pass Through Trusts and were acquired by Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc., Lehman Brothers., and Salomon Brothers Inc (collectively, the "Underwriters") pursuant to the terms of an Underwriting Agreement dated as of November 20, 1996 between the Registrant, GPA Group plc, GPA Leasing USA I, Inc., GPA Leasing USA Sub I, Inc., and the Underwriters. The Registrant is filing this Current Report on Form 8-K for purposes of filing with the Commission forms of certain documents, as contemplated in the Prospectus. Item 7. Financial Statements and Exhibits. (c) Exhibits Exhibit Number Description - ------ ----------- 4.1 Form of Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as Trustee 4.2 Form of Trust Supplement No. 1996-1A, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank 4.3 Form of Trust Supplement No. 1996-1B, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank 4.4 Form of Trust Supplement No. 1996-1C, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank 4.5 Form of Trust Supplement No. 1996-1D, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank 4.6 Form of Trust Supplement No. 1996-1E, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank -1- 3 4.7 Form of Irrevocable Revolving Credit Agreement Class A Certificates, dated as of November 26, 1996, between Fleet National Bank, as Subordination Agent, as agent and trustee for the America West Airlines Pass Through Trust 1996-1A, as Borrower, and Kredietbank N.V., New York Branch, as Liquidity Provider 4.8 Form of Irrevocable Revolving Credit Agreement Class B Certificates, dated as of November 26, 1996, between Fleet National Bank, as Subordination Agent, as agent and trustee for the America West Airlines Pass Through Trust 1996-1B, as Borrower, and Kredietbank N.V., New York Branch, as Liquidity Provider 4.9 Form of Irrevocable Revolving Credit Agreement Class C Certificates, dated as of November 26, 1996, between Fleet National Bank, as Subordination Agent, as agent and trustee for the America West Airlines Pass Through Trust 1996-1C, as Borrower, and Kredietbank N.V., New York Branch, as Liquidity Provider 4.10 Form of Intercreditor Agreement, dated as of November 26, 1996, among Fleet National Bank, as Trustee under the America West Airlines Pass Through Trust 1996-1A, America West Airlines Pass Through Trust 1996-1B, America West Airlines Pass Through Trust 1996-1C, America West Airlines Pass Through Trust 1996-1D, and America West Airlines Pass Through Trust 1996-1E, Kredietbank N.V., New York Branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider, and Fleet National Bank, as Subordination Agent 4.11 Form of Refunding Agreement [GPA 1989 BN-5], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee 4.12 Form of Refunding Agreement [GPA 1989 BN-6], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee 4.13 Form of Refunding Agreement [GPA 1989 BN-10], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee 4.14 Form of Refunding Agreement [GPA 1989 BN-12], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee 4.15 Form of Refunding Agreement [GPA 1990 AWA-13], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee 4.16 Form of Refunding Agreement [GPA 1990 AWA-14], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee -2- 4 4.17 Form of Refunding Agreement [GPA 1989 AWA-15], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee 4.18 Form of Refunding Agreement [GPA 1990 AWA-16], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee 4.19 Form of Refunding Agreement [GPA 1991 AWA-E1], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee 4.20 Form of Refunding Agreement [GPA 1991 AWA-E2], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee 4.21 Form of Refunding Agreement [GPA 1991 AWA-E3], dated as of November 26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee 4.22 Form of Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5], dated as of September 22, 1989, Amended and Restated as of October 1, 1991, and Further Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.23 Form of Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6], dated as of December 15, 1989, Amended and Restated as of October 1, 1991, and Further Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc.; 4.24 Form of Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10], dated as of December 19, 1989, Amended and Restated as of October 1, 1991, and Further Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.25 Form of Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12], dated as of December 19, 1989, Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.26 Form of Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.27 Form of Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. -3- 5 4.28 Form of Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.29 Form of Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.30 Form of Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.31 Form of Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.32 Form of Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, Amended and Restated as of November 26, 1996, between Wilmington Trust Company and America West Airlines, Inc. 4.33 Form of Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and The Chase Manhattan Bank, as Indenture Trustee 4.34 Form of Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and The Chase Manhattan Bank, as Indenture Trustee 4.35 Form of Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and The Chase Manhattan Bank, as Indenture Trustee 4.36 Form of First Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-12], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and Fleet National Bank, as Indenture Trustee 4.37 Form of First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and Fleet National Bank, as Indenture Trustee 4.38 Form of First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-14], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and Fleet National Bank, as Indenture Trustee 4.39 Form of First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-15], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and Fleet National Bank, as Indenture Trustee 4.40 Form of First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-16], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and Fleet National Bank, as Indenture Trustee 4.41 Form of First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E1], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and Fleet National Bank, as Indenture Trustee -4- 6 4.42 Form of Form of First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E2], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and Fleet National Bank, as Indenture Trustee 4.43 Form of First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E3], dated as of November 26, 1996 between Wilmington Trust Company, as Owner Trustee, and Fleet National Bank, as Indenture Trustee -5- 7 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICA WEST AIRLINES, INC. December 11, 1996 By: /s/ Stephen L. Johnson ------------------------------------- Stephen L. Johnson ------------------------------------- Senior Vice President - Legal Affairs ------------------------------------- EX-4.1 2 PASS THROUGH TRUST AGREEMENT DATED 11/26/96 1 EXHIBIT 4.1 AMERICA WEST AIRLINES, INC. and FLEET NATIONAL BANK, as Trustee PASS THROUGH TRUST AGREEMENT Dated as of November 26, 1996 2 Reconciliation and tie between Pass Through Trust Agreement dated as of November 26, 1996 and the Trust Indenture Act of 1939. This reconciliation does not constitute part of the Pass Through Trust Agreement. Trust Indenture Act Pass Through Trust of 1939 Section Agreement Section ------------------- ------------------ 310(a)(1) 7.07 (a)(2) 7.07 312(a) 3.09; 8.01; 8.02 313(a) 7.06; 8.03 314(a) 8.04(a) - (c) (a)(4) 8.04(d) (c)(1) 1.02 (c)(2) 1.02 (d)(1) 7.12; 11.01 (d)(2) 7.12; 11.01 (d)(3) 2.01 (e) 1.02 315(b) 7.01 316(a)(last sentence) 1.04(d) (a)(1)(A) 6.04 (a)(1)(B) 6.05 (b) 6.06 (c) 1.04(d) 317(a)(1) 6.03 (b) 7.12 318(a) 12.08 3 TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS....................................................... 2 Section 1.01. Definitions............................... 2 Section 1.02. Compliance Certificates and Opinions...... 12 Section 1.03. Form of Documents Delivered to Trustee.... 13 Section 1.04. Acts of Certificateholders................ 13 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES................................................... 16 Section 2.01. Amount Unlimited; Issuable in Series...... 16 Section 2.02. Acquisition of Equipment Notes............ 18 Section 2.03. Acceptance by Trustee..................... 20 Section 2.04. Limitation of Powers...................... 20 ARTICLE III THE CERTIFICATES.................................................. 21 Section 3.01. Form, Denomination and Execution of Certificates.............................. 21 Section 3.02. Authentication of Certificates............ 22 Section 3.03. Temporary Certificates.................... 22 Section 3.04. Registration of Transfer and Exchange of Certificates.............................. 22 Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates.............................. 23 Section 3.06. Persons Deemed Owners..................... 24 Section 3.07. Cancellation.............................. 24 Section 3.08. Limitation of Liability for Payments...... 24 Section 3.09. Book-Entry and Definitive Certificates.... 24 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS................... 27 Section 4.01. Certificate Account and Special Payments Account................................... 27 Section 4.02. Distributions from Certificate Account and Special Payments Account.............. 27 Section 4.03. Statements to Certificateholders.......... 29 Section 4.04. Investment of Special Payment Moneys...... 30 4 Page ---- ARTICLE V THE COMPANY....................................................... 30 Section 5.01. Maintenance of Corporate Existence........ 30 Section 5.02. Consolidation, Merger, Etc................ 30 ARTICLE VI DEFAULT........................................................... 32 Section 6.01. Events of Default......................... 32 Section 6.02. Incidents of Sale of Equipment Notes...... 33 Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit........... 34 Section 6.04. Control by Certificateholders............. 34 Section 6.05. Waiver of Past Defaults................... 35 Section 6.06. Right of Certificateholders to Receive Payments Not To Be Impaired............... 35 Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions........... 36 Section 6.08. Remedies Cumulative....................... 36 Section 6.09. Undertaking for Costs..................... 37 ARTICLE VII THE TRUSTEE....................................................... 37 Section 7.01. Notice of Defaults........................ 37 Section 7.02. Certain Rights of Trustee................. 37 Section 7.03. Not Responsible for Recitals or Issuance of Certificates........................... 39 Section 7.04. May Hold Certificates..................... 39 Section 7.05. Money Held in Trust....................... 39 Section 7.06. Compensation and Reimbursement............ 39 Section 7.07. Corporate Trustee Required; Eligibility... 41 Section 7.08. Resignation and Removal; Appointment of Successor................................. 42 Section 7.09. Acceptance of Appointment by Successor.... 44 Section 7.10. Merger, Conversion, Consolidation or Succession to Business.................... 44 Section 7.11. Maintenance of Agencies................... 45 Section 7.12. Money for Certificate Payments to Be Held in Trust............................. 46 Section 7.13. Registration of Equipment Notes in Trustee's Name............................ 47 Section 7.14. Representations and Warranties of Trustee................................... 47 Section 7.15. Withholding Taxes; Information Reporting................................. 48 Section 7.16. Trustee's Liens........................... 48 Section 7.17. Preferential Collection of Claims......... 48 ii 5 Page ---- ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE.................. 49 Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders........................ 49 Section 8.02. Preservation of Information; Communications to Certificateholders...... 49 Section 8.03. Reports by Trustee........................ 49 Section 8.04. Reports by the Company.................... 49 ARTICLE IX SUPPLEMENTAL AGREEMENTS........................................... 50 Section 9.01. Supplemental Agreements Without Consent of Certificateholders..................... 50 Section 9.02. Supplemental Agreements with Consent of Certificateholders........................ 52 Section 9.03. Documents Affecting Immunity or Indemnity................................. 53 Section 9.04. Execution of Supplemental Agreements...... 53 Section 9.05. Effect of Supplemental Agreements......... 53 Section 9.06. Conformity with Trust Indenture Act....... 53 Section 9.07. Reference in Certificates to Supplemental Agreements................... 53 ARTICLE X AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS........................ 54 Section 10.01. Amendments and Supplements to Indenture and Other Note Documents................. 54 ARTICLE XI TERMINATION OF TRUSTS............................................. 55 Section 11.01. Termination of the Trusts................ 55 ARTICLE XII MISCELLANEOUS PROVISIONS.......................................... 56 Section 12.01. Limitation on Rights of Certificateholders....................... 56 Section 12.02. Liabilities of Certificateholders........ 56 Section 12.03. Certificates Nonassessable and Fully Paid..................................... 56 Section 12.04. Registration of Equipment Notes in Name of Subordination Agent................... 57 iii 6 Page ---- Section 12.05. Notices.................................. 57 Section 12.06. Governing Law............................ 58 Section 12.07. Severability of Provisions............... 58 Section 12.08. Trust Indenture Act Controls............. 58 Section 12.09. Effect of Headings and Table of Contents................................. 58 Section 12.10. Successors and Assigns................... 59 Section 12.11. Benefits of Agreement.................... 59 Section 12.12. Legal Holidays........................... 59 Section 12.13. Counterparts............................. 59 Section 12.14. Communication by Certificateholders with Other Certificateholders............ 59 Exhibit A Form of Certificate iv 7 This PASS THROUGH TRUST AGREEMENT, dated as of November 26, 1996, between America West Airlines, Inc., a Delaware corporation (the "Company"), and Fleet National Bank, a national banking association, as Trustee, is made with respect to the formation from time to time of separate America West Airlines Pass Through Trusts, and the issuance from time to time of separate series of Pass Through Certificates representing fractional undivided interests in the respective Trusts. W I T N E S S E T H: WHEREAS, from time to time the Company and the Trustee may enter into a Trust Supplement (this and certain other defined terms used herein are defined in Section 1.01) pursuant to which the Trustee shall declare the creation of a separate Trust for the benefit of the Holders of the series of Certificates to be issued in respect of such Trust, and the initial Holders of the Certificates of such series, as the grantors of such Trust, by their respective acceptances of the Certificates of such series, shall join in the creation of such Trust with the Trustee; WHEREAS, all Certificates to be issued in respect of each separate Trust will be issued as a separate series pursuant to this Agreement, will evidence fractional undivided interests in such Trust and will have no rights, benefits or interests in respect of any other separate Trust or the property held therein, subject, however, to the provisions of any Intercreditor Agreement to which one or more Trusts may be a party; WHEREAS, from time to time, pursuant to the terms and conditions of this Agreement with respect to each separate Trust formed hereunder, the Trustee on behalf of such Trust shall purchase one or more issues of Equipment Notes having the same interest rate as, and final maturity dates not later than the final Regular Distribution Date of, the series of Certificates issued in respect of such Trust and shall hold such Equipment Notes in trust for the benefit of the Certificateholders of such Trust; WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of Equipment Notes by, the Trustee on behalf of each Trust created from time to time pursuant to this Agreement, the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended (the "Securities Act"), of the Certificates to be issued in respect of each Trust and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, has duly authorized the execution and delivery of this Basic Agreement and each Trust Supplement with respect to all such Certificates and is undertaking to perform certain administrative and ministerial duties hereunder and is also undertaking to pay the fees and expenses of the Trustee; WHEREAS, this Basic Agreement, as supplemented from time to time, is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall to the extent applicable, be governed by such provisions; 8 2 NOW THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. For all purposes of this Basic Agreement, except as otherwise expressly provided herein or in a Trust Supplement or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular, (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all references in this Basic Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Basic Agreement; (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Basic Agreement as a whole and not to any particular Article, Section or other subdivision; (5) the term "this Agreement" (as distinguished from "this Basic Agreement") refers, unless the context otherwise requires, to this Basic Agreement as supplemented by the Trust Supplement creating a particular Trust and establishing the series of Certificates issued or to be issued in respect thereof, with reference to such Trust and such series of Certificates, as this Basic Agreement as so supplemented may be further supplemented with respect to such Trust and such series of Certificates; and (6) all references in this Agreement to a "series" of Certificates shall be construed to mean a series of Certificates issued under the related Trust Supplement; and all references in this Basic Agreement or in any Trust Supplement, Intercreditor Agreement, Liquidity Facility, Refunding Agreement, or Note Document to a "class" of Certificates shall be construed to refer to any series of Certificates that have been or will be issued concurrently with, or are intended to be considered concurrently with, one or more other series of Certificates, each established under separate Trust Supplements to purchase related classes of Equipment Notes issued by one or more Owner Trustees that are subject to the same Intercreditor Agreement. 9 3 Act: With respect to any Certificateholder, has the meaning specified in Section 1.04. Affiliate: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Aircraft: Means one or more aircraft, including engines therefor, owned by or leased to the Company and securing one or more Equipment Notes. Authorized Agent: With respect to the Certificates of any series, means any Paying Agent or Registrar for the Certificates of such series. Avoidable Tax: Has the meaning specified in Section 7.08(e). Basic Agreement: Means this Pass Through Trust Agreement, as the same may from time to time be supplemented, amended or modified, but does not include any Trust Supplement. Book-Entry Certificates: With respect to the Certificates of any series, means Certificates of such series which are issued in book-entry form, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 3.09. Business Day: With respect to the Certificates of any series and unless specified otherwise in any Trust Supplement, means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in New York, New York or Hartford, Connecticut. Certificate: Means any one of the Certificates, substantially in the form of Exhibit A hereto, and any such Certificates issued in exchange therefor or replacement thereof pursuant to this Agreement. Certificate Account: With respect to the Certificates of any series, means the account or accounts created and maintained for such series pursuant to Section 4.01(a) and the related Trust Supplement. Certificateholder or Holder: With respect to the Certificates of any series, means the Person in whose name a Certificate of such series is registered in the Register for Certificates of such series. 10 4 Certificate Owner: With respect to the Certificates of any series, means, for purposes of Section 3.09, the Person who owns a Book-Entry Certificate of such series. Clearing Agency: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. Clearing Agency Participant: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. Company: Means America West Airlines, Inc., a Delaware corporation, or its successor in interest pursuant to Section 5.02, or any other obligor (within the meaning of the Trust Indenture Act) with respect to any series of Certificates. Controlling Party: Means the Person entitled to act as such pursuant to the terms of any Intercreditor Agreement. Corporate Trust Office: With respect to the Trustee, the Subordination Agent or any Indenture Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. Cut-off Date: With respect to the Certificates of any series, means the date designated as such in the Trust Supplement establishing such series. Definitive Certificates: With respect to the Certificate of any series, has the meaning specified in Section 3.09. Direction: Has the meaning specified in Section 1.04(c). Distribution Date: Means any Regular Distribution Date or Special Distribution Date as the context requires. Equipment: Means the Aircraft and Spare Engines, collectively. Equipment Note: With respect to the Certificates of any series, means the equipment notes or other promissory notes, loan certificates or other evidence of obligation issued under the related Indenture. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. 11 5 Escrow Account: With respect to the Certificates of any series, has the meaning specified in Section 2.02(b). Escrowed Funds: With respect to any Trust, has the meaning specified in Section 2.02(b). Event of Default: Means, in respect of any Trust, the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by such Trust were issued. Final Legal Distribution Date: With respect to the Certificates of any series, means the date designated as such in the Trust Supplement establishing such series. Fractional Undivided Interest: Means the fractional undivided interest in a Trust that is evidenced by a Certificate relating to such Trust. Indenture: With respect to any Trust, means each of the one or more separate trust indentures and security agreements, loan agreements and mortgages and/or other agreements relating to indebtedness and security interests with respect thereto described in, or on a schedule attached to, this Agreement which relates to an issue of Equipment Notes to be held in such Trust and an indenture, loan agreement and mortgage or other agreement having substantially the same terms and conditions as such trust indenture and security agreement, loan agreement and mortgage or other agreement relating to indebtedness and security interests with respect thereto and which relates to Substitute Equipment; as each such agreement may be amended or supplemented in accordance with its respective terms; and Indentures means all of such agreements. Indenture Default: With respect to any Indenture, means any Indenture Event of Default (as such term is defined in such Indenture). Indenture Trustee: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Indenture Trustee as such trustee; and Indenture Trustees means all of the Indenture Trustees under the Indentures. Initial Regular Distribution Date: With respect to the Certificates of any series, means the first Regular Distribution Date on which a Scheduled Payment is to be made. Intercreditor Agreement: Means any agreement by and among one or more Trusts, one or more Liquidity Providers and a Subordination Agent providing for the distribution of payments made in respect of Equipment Notes held by such Trusts. 12 6 Issuance Date: With respect to the Certificates of any series, means the date of the issuance of such Certificates. Lease: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and Leases means all such Leases. Liquidity Facility: With respect to the Certificates of any Series, means any revolving credit agreement or similar facility relating to the Certificates of such series between a Liquidity Provider and a Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of any Intercreditor Agreement. Liquidity Provider: With respect to the Certificates of any Series, means a bank or other financial institution that agrees to provide a Liquidity Facility for the benefit of the holders of Certificates of such series. Note Documents: With respect to any Equipment Note, means the related Indenture, Refunding Agreement, guarantees of such Equipment Note, if any and if the related Equipment is leased to the Company, the related Lease and the related Owner Trustee's Purchase Agreement. Officer's Certificate: Means a certificate signed, (a) in the case of the Company, by (i) the Chairman or Vice Chairman of the Board of Directors, the President or any Executive Vice President or Senior Vice President of the Company, signing alone or (ii) any Vice President of the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, or (b) in the case of the Trustee or an Owner Trustee or an Indenture Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Indenture Trustee, as the case may be. Opinion of Counsel: Means a written opinion of legal counsel who (a) in the case of counsel for the Company, may be (i) a senior attorney in rank of the officers of the Company a principal duty of which is furnishing advice as to legal matters, (ii) Andrews & Kurth L.L.P., (iii) Latham & Watkins, or (iv) such other counsel designated by the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Indenture Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. Other Agreements: Has the meaning specified in Section 6.01(b). Outstanding: With respect to Certificates of any series, means, as of the date of determination, all Certificates 13 7 of such series theretofore authenticated and delivered under this Agreement, except (i) Certificates of such series theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates of such series if money in the full amount required to make the final distribution with respect to such series pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of the Certificates of such series as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates of such series in exchange for or in lieu of which other Certificates of such series have been authenticated and delivered pursuant to this Agreement. Owner Participant: With respect to any Equipment Note, means the "Owner Participant", if any, as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. Owner Trustee: With respect to any Equipment Note, means the "Owner Trustee", if any, as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. Owner Trustee's Purchase Agreement: With respect to the Certificates of any series, if the related Equipment is leased to the Company, has the meaning specified for the term Purchase Agreement in the related Lease. Paying Agent: With respect to the Certificates of any series, means the paying agent maintained and appointed for the Certificates of such series pursuant to Section 7.11. Permitted Investments: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. Person: Means any person, including any individual corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. 14 8 Pool Balance: Means, with respect to the Certificates of any series, as of any date, (i) the original aggregate face amount of the Certificates of such series less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance of any series of Certificates as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the related Trust and the distribution thereof to be made on such Distribution Date. Pool Factor: Means, with respect to any series of Certificates as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance of such series as at such date by (ii) the original aggregate face amount of the Certificates of such series. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date. Postponed Notes: With respect to any Trust or the related series of Certificates, means the Equipment Notes to be held in such Trust as to which a Postponement Notice shall have been delivered pursuant to Section 2.02(b). Postponement Notice: With respect to any Trust or the related series of Certificates, means an Officer's Certificate of the Company signed by an officer of the Company (1) requesting that the Trustee temporarily postpone purchase of the related Equipment Notes to a date later than the Issuance Date of such series of Certificates, (2) identifying the amount of the purchase price of each such Equipment Note and the aggregate purchase price for all such Equipment Notes, (3) setting forth the reasons for such postponement and (4) with respect to each such Equipment Note, either (a) setting or resetting a new Transfer Date (which shall be on or prior to the applicable Cutoff Date) for payment by the Trustee of such purchase price and issuance of the related Equipment Note, or (b) indicating that such new Transfer Date (which shall be on or prior to the applicable Cut-off Date) will be set by subsequent written notice not less than one Business Day prior to such new Transfer Date. PTC Event of Default: With respect to the Certificates of any series, has the meaning specified in the Trust Supplement establishing each series. Record Date: With respect to any Trust or the related series of Certificates, means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, with respect to such series, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the 15 9 final distribution, with respect to such series, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. Refunding Agreement: With respect to the Certificates of any series, means any note purchase, refunding, participation or similar agreement providing for, among other things, the purchase of Equipment Notes by the Trustee on behalf of the relevant Trust, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms; and Refunding Agreements means all such agreements. Register and Registrar: With respect to the Certificates of any series, mean the register maintained and the registrar appointed for such series pursuant to Sections 3.04 and 7.11. Regular Distribution Date: With respect to distributions of Scheduled Payments in respect of any series of Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in such Trust has been made. Request: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Basic Agreement. Responsible Officer: With respect to any Trustee, any Indenture Trustee and any Owner Trustee, means any officer in the corporate trust division or department of the Trustee, Indenture Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. Scheduled Payment: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates of any series with funds drawn under the Liquidity Facility for such series (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such installment of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission, as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of 16 10 this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Spare Engine: Means one or more spare engines, owned by or leased to the Company and securing one or more Equipment Notes. Special Distribution Date: With respect to the Certificates of any series, means the date specified as such in the related Trust Supplement. Special Payment: Means (i) any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or (ii) the amounts required to be distributed pursuant to the last paragraph of Section 2.02(b) or (iii) the amounts required to be distributed pursuant to the penultimate paragraph of Section 2.02(b). Special Payments Account: With respect to the Certificates of any series, means the account or accounts created and maintained for such series pursuant to Section 4.01(b) and the related Trust Supplement. Specified Investments: With respect to any Trust, means, unless otherwise specified in the related Trust Supplement, (i) direct obligations of the United States or any agency thereof the obligations of which bear the full faith and credit of the United States, (ii) obligations fully guaranteed by the United States, or (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital surplus and undivided income of at least $750,000,000 and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thomson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation and (v) money market funds which invest solely in obligations described in clause (i) or (ii); provided further that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal Funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the Special Distribution Date next following the Cut-off Date, if any, for such Trust by more than 20 days. 17 11 Subordination Agent: Shall have the meaning specified therefor in any Intercreditor Agreement. Substitute Equipment: With respect to any Trust, (i) means any Aircraft of a type specified in this Agreement and, at the election of the Company, substituted prior to the applicable Cut-off Date, if any, pursuant to the terms of this Agreement and (ii) means any Spare Engine of a type specified in this Agreement and, at the election of the Company, substituted prior to the applicable Cut-off Date, if any, pursuant to the terms of this Agreement. Transfer Date: Has the meaning assigned to that term in a related Refunding Agreement or any of the terms "Delivery Date", "Funding Date" or "Closing Date" in a related Refunding Agreement. Triggering Event: Shall have the meaning specified therefor in any Intercreditor Agreement. Trust: With respect to the Certificates of any series, means the trust created pursuant to the Basic Agreement and the related Trust Supplement for the benefit of the Holders of the Certificates of such series. Trust Indenture Act: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Basic Agreement was executed. Trust Property: With respect to any Trust means (i) the Equipment Notes held as the property of such Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of such Trust under any Intercreditor Agreement, including all monies receivable in respect of such rights, (iii) all monies receivable under any Liquidity Facility for such Trust and (iv) funds from time to time deposited in the related Escrow Account, the related Certificate Account and the related Special Payments Account and any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. Trust Supplement: Means an agreement supplemental hereto pursuant to which (i) a separate Trust is created for the benefit of the Holders of the Certificates of a series, (ii) the issuance of the Certificates of such series representing fractional undivided interests in such Trust is authorized and (iii) the terms of the Certificates of such series are established. Trustee: Means the institution executing this Basic Agreement as Trustee, or its successor in interest, and any successor trustee appointed as provided herein. Trustee's Lien: Has the meaning specified in Section 7.16. 18 12 Underwriter: With respect to the Certificates of any series, has the meaning specified as such in the Trust Supplement establishing such series. Section 1.02. Compliance Certificates and Opinions. Upon any application or request by the Company, any Owner Trustee or any Indenture Trustee to the Trustee to take any action under any provision of this Basic Agreement or, in respect of the Certificates of any series, this Agreement, the Company, such Owner Trustee or such Indenture Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Basic Agreement or this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Basic Agreement or this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or,opinion with respect to compliance with a condition or covenant provided for in this Basic Agreement or, in respect of the Certificates of any series, this Agreement (other than a certificate provided pursuant to Section 8.04(d)) or any Trust Supplement shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Basic Agreement or this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and 19 13 one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Basic Agreement or, in respect of the Certificates of any series, this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. Acts of Certificateholders. (a) Any direction, consent, waiver or other action provided by this Agreement in respect of the Certificates of any series to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Indenture Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of such Trust Supplement and conclusive in favor of the Trustee, the Company and the related Indenture Trustee, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates of any series Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned 20 14 by the Company, any related Owner Trustee, any related Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any, such Person owns 100% of the Certificates of any series Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates of such series so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, any related Owner Trustee, any related Owner Participant or any Affiliate of any such Person. (d) The Company may at its option by delivery of an Officer's Certificate to the Trustee set a record date to determine the Certificateholders in respect of the Certificates of any series, entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent, request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record of the applicable series at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates of such series have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates of such series shall be computed as of such record date; provided that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Basic Agreement not later than one year after the record date. (e) Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates of any series owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates of such series. 21 15 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. Amount Unlimited; Issuable in Series. (a) The aggregate principal amount of Certificates of each series which may be authenticated and delivered under this Basic Agreement is limited to an amount equal to the aggregate principal amount of the Equipment Notes held in the related Trust. The Certificates may be issued from time to time in one or more series and shall be designated generally as the "Pass Through Certificates", with such further designations added or incorporated in such title for the Certificates of each series as specified in the related Trust Supplement. Each Certificate shall bear upon its face the designation so selected for the series to which it belongs. All Certificates of the same series shall be substantially identical except that the Certificates of a series may differ as to denomination and as may otherwise be provided in the Trust Supplement establishing the Certificates of such series. Each series of Certificates issued pursuant to this Agreement will evidence fractional undivided interests in the related Trust and, except as may be contained in any Intercreditor Agreement, will have no rights, benefits or interests in respect of any other Trust or the Trust Property held therein. All Certificates of the same series shall be in all respects equally and ratably entitled to the benefits of this Agreement without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Agreement. (b) The following matters shall be established with respect to the Certificates of each series issued hereunder by a Trust Supplement executed and delivered by and among the Company and the Trustee: (1) the formation of the Trust as to which the Certificates of such series represent fractional undivided interests and its designation (which designation shall distinguish such Trust from each other Trust created under this Basic Agreement and a Trust Supplement); (2) the specific title of the Certificates of such series (which title shall distinguish the Certificates of such series from each other series of Certificates created under this Basic Agreement and a Trust Supplement); (3) any limit upon the aggregate principal amount of the Certificates of such series which may be authenticated and delivered (which limit shall not pertain to Certificates authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Certificates of the series pursuant to Sections 3.03, 3.04 and 3.05; 22 16 (4) the Cut-off Date with respect to the Certificates of such series; (5) the Regular Distribution Dates applicable to the Certificates of such series; (6) the Final Legal Distribution Date with respect to the Certificates of such series; (7) the Special Distribution Dates applicable to the Certificates of such series; (8) if other than as provided in Section 7.11(b), the Registrar or the Paying Agent for the Certificates of such series, including any Co-Registrar or additional Paying Agent; (9) if other than as provided in Section 3.01, the denominations in which the Certificates of such series shall be issuable; (10) if other than United States dollars, the currency or currencies (including currency units) in which the Certificates of such series shall be denominated; (11) the specific form of the Certificates of such series (including the interest rate applicable thereto (or, in the case of any Certificates denominated in a currency other than United States dollars and if other than as provided in Section 3.09, whether and the circumstances under which beneficial owners of interests in such Certificates in permanent global form may exchange such interests for Certificates of such series and of like tenor of any authorized form and denomination); (12) a description of the Equipment Notes to be acquired and held in the related Trust and of the related Equipment and Note Documents; (13) provisions with respect to the terms for which the definitions set forth in Article I hereof or the terms of Section 11.01 hereof permit or require further specification in the related Trust Supplement; (14) any restrictions (including legends) in respect of ERISA; (15) whether such series will be subject to an Intercreditor Agreement and, if so, the specific designation of such Intercreditor Agreement and whether such series may be purchased in accordance with Section 6.01(b) hereof; and (16) any other terms of the Certificates of such series (which terms shall not be inconsistent with the provisions of the Trust Indenture Act), including any terms which may 23 17 be required or advisable under United States laws or regulations or advisable in connection with the marketing of Certificates of the series. (c) At any time and from time to time after the execution and delivery of this Basic Agreement and a Trust Supplement forming a Trust and establishing the terms of Certificates of a series, Certificates of such series shall be executed, authenticated and delivered by the Trustee to the Person or Persons specified by the Company upon request of the Company and upon satisfaction of any conditions precedent set forth in such Trust Supplement or in any other document to which a Trustee is a party relating to the issuance of the Certificates of such series. Section 2.02. Acquisition of Equipment Notes. (a) Unless otherwise specified in the related Trust Supplement, on or prior to the Issuance Date of the Certificates of a series, the Trustee shall execute and deliver the related Refunding Agreements in the form delivered to the Trustee by the Company. The Trustee shall issue and sell such Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate purchase price of such Equipment Notes and, concurrently therewith, the Trustee shall purchase, pursuant to the terms and conditions of the Refunding Agreements, the Equipment Notes at a purchase price equal to the amount of such consideration so received. Except as provided in Sections 3.03, 3.04 and 3.05 hereof, the Trustee shall not execute, authenticate or deliver Certificates of such series in excess of the aggregate amount specified in this paragraph. The provisions of this Subsection (a) are subject to the provisions of Subsection (b) below. (b) If on or prior to the Issuance Date with respect to a series of Certificates the Company shall deliver to the Trustee a Postponement Notice relating to one or more Postponed Notes, the Trustee shall postpone the purchase of such Postponed Notes and shall deposit into an escrow account (as to such Trust, the "Escrow Account") to be maintained as a part of the related Trust an amount equal to the purchase price of such Postponed Notes (the "Escrowed Funds"). The Escrowed Funds so deposited shall be invested by the Trustee at the written direction and risk of, and for the benefit of, the Company in Specified Investments (i) maturing no later than any scheduled Transfer Date relating to such series of Certificates or (ii) if no such Transfer Date has been scheduled, maturing on the next Business Day, or (iii) if the Company has given notice to the Trustee that any Postponed Notes will not be issued, with respect to the portion of the Escrowed Funds relating to such Postponed Notes, maturing on the next applicable Special Distribution Date, if such investments are reasonably available for purchase. The Trustee shall make withdrawals from the Escrow Account only as provided in this Agreement. Upon request of the Company on one 24 18 or more occasions and the satisfaction of the closing conditions specified in the applicable Refunding Agreements on or prior to the related Cut-off Date, the Trustee shall purchase the applicable Postponed Notes with the Escrowed Funds withdrawn from the Escrow Account. The purchase price shall equal the principal amount of such Postponed Notes. The Trustee shall hold all Specified Investments until the maturity thereof and will not sell or otherwise transfer Specified Investments. If Specified Investments held in an Escrow Account mature prior to any applicable Transfer Date, any proceeds received on the maturity of such Specified Investments (other than any earnings thereon) shall be reinvested by the Trustee at the written direction and risk of, and for the benefit of, the Company in Specified Investments maturing as provided in the preceding paragraph. Any earnings on Specified Investments received from time to time by the Trustee shall be promptly distributed to the Company. The Company shall pay to the Trustee for deposit to the relevant Escrow Account an amount equal to any losses on such Specified Investments as incurred. On the Initial Regular Distribution Date in respect of the Certificates of any series, the Company will pay (in immediately available funds) to the Trustee an amount equal to the interest that would have accrued on any Postponed Notes, if any, purchased after the Issuance Date if such Postponed Notes had been purchased on the Issuance Date, from the Issuance Date to, but not including, the date of the purchase of such Postponed Notes by the Trustee. If, in respect of the Certificates of any series, the Company notifies the Trustee prior to the Cut-off Date that any Postponed Notes will not be issued on or prior to the Cut-off Date for any reason, on the next Special Distribution Date for such Certificates occurring more than 20 days following the date of such notice (i) the Company shall pay to the Trustee for deposit in the related Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on the Postponed Notes designated in such notice at a rate equal to the interest rate applicable to such Certificates from the Issuance Date to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer an amount equal to that amount of Escrowed Funds that would have been used to purchase the Postponed Notes designated in such notice and the amount paid by the Company pursuant to the immediately preceding clause (i) to the related Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. If, on such Cut-off Date, an amount equal to less than all of the Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) has been used to purchase Postponed Notes, on the next such Special Distribution Date occurring more than 20 days following such Cut-off Date (i) the Company shall pay to the Trustee for deposit in such Special 25 19 Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on such Postponed Notes contemplated to be purchased with such unused Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) but not so purchased at a rate equal to the interest rate applicable to such Certificates from the Issuance Date to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds and the amount paid by the Company pursuant to the immediately preceding clause (i) to such Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. Section 2.03. Acceptance by Trustee. The Trustee, upon the execution and delivery of a Trust Supplement creating a Trust and establishing a series of Certificates, shall acknowledge its acceptance of all right, title, and interest in and to the Equipment Notes to be acquired pursuant to Section 2.02 hereof and the related Refunding Agreements and shall declare that the Trustee holds and will hold such right, title, and interest, together with all other property constituting the Trust Property of such Trust, for the benefit of all then present and future Certificateholders of such series, upon the trusts herein and in such Trust Supplement set forth. By its payment for and acceptance of each Certificate of such series issued to it under this Agreement, each initial Certificateholder of such series as grantor of such Trust shall thereby join in the creation and declaration of such Trust. Section 2.04. Limitation of Powers. Each Trust shall be constituted solely for the purpose of making the investment in the Equipment Notes provided for in the related Trust Supplement, and, except as set forth herein or in this Agreement, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restriction, acquiring the Aircraft or Spare Engine (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft or Spare Engine once acquired). ARTICLE III THE CERTIFICATES Section 3.01. Form, Denomination and Execution of Certificates. The Certificates of each series shall be issued in fully registered form without coupons and shall be substantially in the form attached hereto as Exhibit A, with such omissions, variations and insertions as are permitted by this Agreement, and may have such letters, numbers or other marks of identification and such legends or endorsements printed, lithographed or engraved thereon, as may be required to comply with the rules of 26 20 any securities exchange on which such Certificates may be listed or to conform to any usage in respect thereof, or as may, consistently herewith, be prescribed by the Trustee or by the officer executing such Certificates, such determination by said officer to be evidenced by his signing the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. Except as provided in Section 3.09, the definitive Certificates of such series shall be printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Certificates may be listed, all as determined by the officer executing such Certificates, as evidenced by his execution of such Certificates. Except as otherwise provided in the related Trust Supplement, the Certificates of each series shall be issued in denominations of $1,000 and integral multiples thereof, except that one Certificate of each series may be issued in a different denomination. The Certificates of such series shall be executed on behalf of the Trustee by manual or facsimile signature of a Responsible Officer of the Trustee. Certificates of any series bearing the manual or facsimile signature of an individual who was, at the time when such signature was affixed, authorized to sign on behalf of the Trustee shall be valid and binding obligations of the Trustee, notwithstanding that such individual has ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such office at the date of such Certificates. No Certificate of any series shall be entitled to any benefit under this Agreement, or be valid for any purpose unless there appears on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A hereto executed by the Trustee by manual signature, and such certificate of authentication upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. All Certificates of any series shall be dated on the date of their authentication. Section 3.02. Authentication of Certificates. The Trustee shall duly authenticate and deliver Certificates of each series in authorized denominations equalling in the aggregate the aggregate principal amount of the Equipment Notes to be purchased by the Trustee pursuant to the related Refunding Agreements, and evidencing the entire ownership of the related Trust. Section 3.03. Temporary Certificates. Pending the preparation of definitive Certificates of any series, the Trustee may execute, authenticate and deliver temporary Certificates of such series which are printed, lithographed, typewritten, or otherwise produced, in any denomination, containing substantially 27 21 the same terms and provisions as set forth in Exhibit A hereto, except for such appropriate insertions, omissions, substitutions and other variations relating to their temporary nature as the officer executing such temporary Certificates may determine, as evidenced by its execution of such temporary Certificates. If temporary Certificates of any series are issued, the Company will cause definitive Certificates of such series to be prepared without unreasonable delay. After the preparation of definitive Certificates of such series, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of such temporary Certificates at the Corporate Trust Office of the Trustee, or at the office or agency of the Trustee maintained in accordance with Section 7.11, without charge to the holder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor definitive Certificates of like series, in authorized denominations and of a like aggregate Fractional Undivided Interest. Until so exchanged, such temporary Certificates shall in all respects be entitled to the same benefits under this Agreement as definitive Certificates. Section 3.04. Registration of Transfer and Exchange of Certificates. The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 a register (the "Register") for each series of Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Certificates of such series and of transfers and exchanges of such Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering Certificates of each series and transfers and exchanges of such Certificates as herein provided. If a Person other than the Trustee is appointed by the Company as the Registrar, the Company will give the Trustee prompt written notice of the appointment of such Registrar and of the location, and any change in the location, of the Register, and the Trustee shall have the right to inspect the Register at all reasonable times and to obtain copies thereof, and the Trustee shall have the right to conclusively rely upon an officers' certificate executed on behalf of the Registrar as to the names and addresses of the Certificateholders and the principal amounts and numbers of such Certificates. Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office or such other office or agency, the Trustee shall execute, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Certificates of like series, in authorized denominations of a like aggregate Fractional Undivided Interest. At the option of a Certificateholder, Certificates may be exchanged for other Certificates of like series, in authorized 28 22 denominations and of a like aggregate Fractional Undivided Interest, upon surrender of the Certificates to be exchanged at any such office or agency. Whenever any Certificates are so surrendered for exchange, the Trustee shall execute, authenticate and deliver the Certificates that the Certificateholder making the exchange is entitled to receive. All Certificates issued upon any registration of transfer or exchange of Certificates shall be valid obligations of the Trust, evidencing the same interest therein, and entitled to the same benefits under this Agreement, as the Certificates surrendered upon such registration of transfer or exchange. Every Certificate presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar duly executed by the Certificateholder thereof or its attorney duly authorized in writing. No service charge shall be made to a Certificateholder for any registration of transfer or exchange of Certificates, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates. All Certificates surrendered for registration of transfer and exchange shall be canceled and subsequently destroyed by the Trustee. Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates of like series, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.05, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.05 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.06. Persons Deemed Owners. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes 29 23 whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.07. Cancellation. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates canceled as provided in this Section, except as expressly permitted by this Agreement. All canceled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.08. Limitation of Liability for Payments. All payments or distributions made to Certificateholders of any series under the related Trust Supplement shall be made only from the Trust Property of the related Trust and only to the extent that the Trustee shall have sufficient income or proceeds from such Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property of the related Trust to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.09. Book-Entry and Definitive Certificates. (a) The Certificates of any series may be issued in the form of one or more typewritten Certificates representing the Book-Entry Certificates of such series, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Company. In such case, the Certificates of such series delivered to The Depository Trust Company shall initially be registered on the Register in the name of CEDE & Co., the nominee of the initial Clearing Agency, and no Certificate Owner will receive a definitive certificate representing such Certificate Owner's interest in the Certificates of such series, except as provided above and in Subsection (c) below. As to the Certificates of any series, unless and until definitive, fully registered Certificates (the "Definitive Certificates") have been issued pursuant to Subsection (c) below: (i) the provisions of this Section 3.09 shall be in full force and effect; (ii) the Company, the Paying Agent, the Registrar and the Trustee may deal with the Clearing Agency and the Clearing Agency Participants for all purposes (including the making of distributions on the Certificates and the distribution of statements pursuant to Section 4.03) as the authorized representatives of the Certificate Owners; (iii) to the extent that the provisions of this Section 3.09 conflict with any other provisions of this 30 24 Agreement (other than the provisions of any Trust Supplement amending this Section 3.09 as permitted by this Basic Agreement), the provisions of this Section 3.09 shall control; (iv) the rights of Certificate Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Certificate Owners and the Clearing Agency Participants; and until Definitive Certificates are issued pursuant to Subsection (c) below, the Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest and premium, if any, on the Certificates to such Clearing Agency Participants; and (v) whenever this Agreement requires or permits actions to be taken based upon instructions or directions of Certificateholders of such series holding Certificates of such series evidencing a specified percentage of the Fractional Undivided Interests in the related Trust, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Certificate Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in Certificates of such series and has delivered such instructions to the Trustee. The Trustee shall have no obligation to determine whether the Clearing Agency has in fact received any such instructions. (b) Whenever notice or other communication to the Certificateholders of such series is required under this Agreement, unless and until Definitive Certificates shall have been issued pursuant to Subsection (c) below, the Trustee shall give all such notices and communications specified herein to be given to Certificateholders of such series to the Clearing Agency. (c) If with respect to the Certificates of any series (i) the Company advises the Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities and the Trustee or the Company is unable to locate a qualified successor, (ii) the Company at its option, advises the Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (iii) after the occurrence of an Event of Default with respect to the related Trust, Certificate Owners of Book-Entry Certificates of such series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust, by Act of said Certificate Owners delivered to the Company and the Trustee, advise the Company, the Trustee and the Clearing Agency through the Clearing Agency Participants in writing that the continuation of a book-entry system through the Clearing Agency Participants is no longer in the best interests of the Certificate Owners of 31 25 such series, then the Trustee shall notify all Certificate Owners of such series, through the Clearing Agency, of the occurrence of any such event and of the availability of Definitive Certificates. Upon surrender to the Trustee of all the Certificates of such series held by the Clearing Agency, accompanied by registration instructions from the Clearing Agency Participants for registration of Definitive Certificates in the names of Certificate Owners of such series, the Trustee shall issue and deliver the Definitive Certificates of such series in accordance with the instructions of the Clearing Agency. Neither the Company, the Registrar, the Paying Agent nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such registration instructions. Upon the issuance of Definitive Certificates of such series, the Trustee shall recognize the Person in whose name the Definitive Certificates are registered in the Register as Certificateholders hereunder. Neither the Company nor the Trustee shall be liable if the Trustee or the Company is unable to locate a qualified successor Clearing Agency. (d) The provisions of this Section 3.09 may be made inapplicable to any series or may be amended with respect to any series in the related Trust Supplement. ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments Account. (a) The Trustee shall establish and maintain on behalf of the Certificateholders of each series a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders of such series, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders of each series a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders of such series, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. 32 26 (c) The Trustee shall present to the Indenture Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02. Distributions from Certificate Account and Special Payments Account. (a) On each Regular Distribution Date with respect to a series of Certificates or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on the Equipment Notes held in the related Trust on such date, the Trustee shall distribute out of the applicable Certificate Account the entire amount deposited therein pursuant to Section 4.01(a). There shall be so distributed to each Certificateholder of record of such series on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Trust held by such Certificateholder) of the aggregate amount in the applicable Certificate Account. (b) On each Special Distribution Date with respect to any Special Payment with respect to a series of Certificates or as soon thereafter as the Trustee has confirmed receipt of the Special Payments due on the Equipment Notes held in the related Trust or realized upon the sale of such Equipment Notes, the Trustee shall distribute out of the applicable Special Payments Account the entire amount of such Special Payment deposited therein pursuant to Section 4.01(b). There shall be so distributed to each Certificateholder of record of such series on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Trust held by such Certificateholder) of the aggregate amount in the applicable Special Payments Account on account of such Special Payment. (c) The Trustee shall at the expense of the Company, cause notice of each Special Payment with respect to a series of Certificates to be mailed to each Certificateholder of such series at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the related Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment. Notices mailed by the Trustee shall set forth: 33 27 (i) the scheduled Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate (taking into account any payment to be made by the Company pursuant to Section 2.02(b)) and the amount thereof constituting principal premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates of such series, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of premium, if any, payable upon the redemption or purchase of an Equipment Note has not been calculated at the date that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in any Trust is canceled, the Trustee, as soon as possible after learning thereof, shall cause notice thereof to be mailed to each Certificateholder of the related series at its address as it appears on the Register. Section 4.03. Statements to Certificateholders. (a) On each Regular Distribution Date and Special Distribution Date with respect to a series of Certificates, the Trustee will include with each distribution to Certificateholders of the related series a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (per $1,000 face amount Certificate as to (i) and (ii) below): (i) The amount of such distribution allocable to principal and the amount allocable to premium, if any; (ii) The amount of such distribution allocable to interest; and (iii) The Pool Balance and the Pool Factor of the related Trust. With respect to the Certificates registered in the name of the Clearing Agency, on the Record Date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing 34 28 Agency's books as holding interests in the Certificates on such Record Date. On each Distribution Date, the applicable Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of interests in the Certificates. On each Distribution Date, the applicable Trustee will mail to each Underwriter the statement described above. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) and (a)(ii) with respect to the related Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its Federal income tax returns. With respect to Certificates registered in the name of the Clearing Agency, such report and such other items shall be prepared on the basis of information supplied to the Trustees by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants to holders of interests in Certificates. Section 4.04. Investment of Special Payment Moneys. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate Existence. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as 35 29 otherwise specifically permitted in Section 5.02; provided, however, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. Consolidation, Merger, Etc. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding a carrier operating certificate issued by the Secretary of Transportation pursuant to Chapter 447 of Title 49, United States Code, for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo and with respect to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under the sections of Title 49, United States Code, relating to aviation; (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee applicable to the Certificates of each series a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents to which the Company is a party and of this Agreement applicable to the Certificates of each series to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates of each series or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. 36 30 Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement applicable to the Certificates of each series with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of any Note Document and of this Agreement applicable to the Certificates of such series to which it is a party. ARTICLE VI DEFAULT Section 6.01. Events of Default. (a) Exercise of Remedies: Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in any Intercreditor Agreement. (b) Purchase Rights of Certificateholders: By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder of Certificates of a series will have certain rights, the exercise of which will be specified in the applicable Trust Supplement, to purchase the class of Certificates with immediate seniority to the Certificates held by the purchasing Certificateholder. The purchase price with respect to the Certificates of any series shall be equal to the Pool Balance of the Certificates of such series, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Agreement, any Intercreditor Agreement or any other Note Document or on or in respect of the Certificates of such series; provided, however, that no such purchase of Certificates of such series shall be effective unless the purchaser shall certify to the Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the other Agreements, if any, relating to Certificates of multiple series that are subject to the same Intercreditor Agreement (such other Agreements as defined in the Trust Supplements establishing such series, the "Other Agreements"), the Certificates of each such series that is senior to the Certificates held by such purchaser. Each payment of the purchase price of the Certificates of any series shall be made to an account or accounts designated by the Trustee and each such purchase shall 37 31 be subject to the terms of this Section. Each Certificateholder of any series agrees by its acceptance of Certificates of such series that it will, upon payment from any such Certificateholders of Certificates with a lower seniority of the purchase price specified herein, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in this Agreement, any Intercreditor Agreement, the Liquidity Facility, the Note Documents and all Certificates of such series held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Agreement, any Intercreditor Agreement, the Liquidity Facility and the Note Documents. The Certificates of such series will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders to deliver any Certificates of such series and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Certificates to the purchaser and receive the purchase price for such Certificates of such series and (ii) if the purchaser shall so request, such Certificateholder will comply with all of the provisions of Section 3.04 hereof to enable new Certificates of such 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 Certificates shall be borne by the purchaser thereof. (c) No Action Contrary to the Company's Rights under a Related Lease. Notwithstanding any of the provisions of this Agreement to the contrary, each Trustee agrees and each Certificateholder of any series agrees by its acceptance of such Certificate for the benefit of the Company that it will not take any action contrary to the Company's rights under any related Lease, including the right of the Company to possession and use the quiet enjoyment of the Equipment subject to such related Lease, except in accordance with the provisions of the related Lease. Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) Certificateholders and Trustee May Purchase Equipment Notes. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess 38 32 and dispose of such Equipment Notes in their own absolute right without further accountability. (2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Application of Moneys Received upon Sale. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall, after payment of fees and expenses of the Trustee as provided in Section 7.06, be applied as provided in Section 4.02. Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit. If there shall be a failure to make payment when due and payable of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay any other amount under any Indenture when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of any Intercreditor Agreement and any Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Indenture and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. Control by Certificateholders. Subject to Section 6.03 and any Intercreditor Agreement, the Certificateholders holding Certificates of a series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to such Trust or pursuant to the terms of any Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or any Intercreditor Agreement, including any right of the Trustee as Controlling Party under any Intercreditor Agreement or as holder of the Equipment Notes, provided that (1) such Direction shall not in the opinion of the Trustee be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, 39 33 (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders of such series not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. Waiver of Past Defaults. Subject to any Intercreditor Agreement, the Certificateholders holding Certificates of a series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Indenture Trustee to waive, any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Indenture Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates of a series, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate of a series affected thereby. Upon any such waiver, such default shall cease to exist with respect to Certificates of such series and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders of such series to the relevant Indenture Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. Right of Certificateholders to Receive Payments Not To Be Impaired. Anything in this Agreement to the contrary notwithstanding, including without limitation Section 6.07 hereof, but subject to any Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the applicable Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable 40 34 Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions. A Certificateholder of any series shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) the Certificateholders holding Certificates of such series evidencing Fractional Undivided Interests aggregating not less than 25% of the related Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates of such series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust. It is understood and intended that no one or more of the Certificateholders of any series shall have any right in any manner whatever hereunder or under the related Trust Supplement or under the Certificates of such series to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property of the related Trust or the lien of any related Indenture on any property subject thereto, or the rights of the Certificateholders of such series or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder of such series or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders of such series subject to the provisions of this Agreement. Section 6.08. Remedies Cumulative. Every remedy given hereunder to the Trustee or to any of the Certificateholders of any series shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. 41 35 Section 6.09. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company. ARTICLE VII THE TRUSTEE Section 7.01. Notice of Defaults. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder known to the Trustee, the Trustee shall transmit by mail to the Company, any related Owner Trustees, the related Indenture Trustees and the Certificateholders holding Certificates of the related series in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders of the related series. For the purpose of this Section in respect of any Trust, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default in respect of that Trust. Section 7.02. Certain Rights of Trustee. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or any Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to 42 36 taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any related Owner Trustee or any related Indenture Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or any Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or any Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or any Intercreditor Agreement or perform any duties under this Agreement or any Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or any Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates of any series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or any Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and 43 37 (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. Not Responsible for Recitals or Issuance of Cerificates. The recitals contained herein and in the Certificates of each series, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Basic Agreement or any Trust Supplement, any Note Documents, any Refunding Agreement or any Intercreditor Agreement, any Equipment Notes or the Certificates of any series, except that the Trustee hereby represents and warrants that this Basic Agreement has been, and each Trust Supplement, each Certificate and each Intercreditor Agreement of, or relating to, each series will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. May Hold Certificates. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act may otherwise deal with the Company, any Owner Trustees or the Indenture Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. Money Held in Trust. Money held by the Trustee or the Paying Agent in trust hereunder or under any Trust Supplement need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. Compensation and Reimbursement. The Company agrees: (1) to pay, or cause to be paid, to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided in any Trust Supplement, to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Basic Agreement, any Trust Supplement or any Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), 44 38 except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Company will pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company to contest the imposition of such tax and the Trustee, in its individual capacity, shall, at the Company's expense, cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Company will pay the reasonable fees and expenses of such counsel. The Company need not pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates of each series upon, all property and funds held or collected by the Trustee in its capacity as Trustee with respect to such series or the related Trust for any tax incurred without negligence, bad faith or willful misconduct, on its part, arising out of or in connection with the acceptance or administration of such Trust 45 39 (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property of such Trust for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders of such series as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section 7.06 with respect to each Trust the Trustee shall have a lien prior to the Certificates of the related series upon all property and funds held or collected by the Trustee in its capacity as Trustee with respect to such Certificates and the related Trust. Section 7.07. Corporate Trustee Required; Eligibility. Each Trust shall at all times have a Trustee which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $100,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $100,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of Federal, State, Territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee of any Trust, the Trustee shall resign immediately as Trustee of such Trust in the manner and with the effect specified in Section 7.08. Section 7.08. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee of any Trust pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee of any or all Trusts by giving written notice thereof to the Company, the Authorized Agents, the related Owner Trustees and the related Indenture Trustees. If an instrument of acceptance 46 40 by a successor Trustee shall not have been delivered to the Company, the related Owner Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time as trustee of any Trust by Act of the Certificateholders of the related series holding Certificates of such series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in such Trust delivered to the Trustee and to the Company, the related Owner Trustees and the related Indenture Trustees. (d) If at any time in respect of any Trust: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder of the related series who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder of the related series who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee of such Trust. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) in respect of any Trust which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee of such Trust hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee of such Trust in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" in respect of such Trust means a state or local tax (i) upon (w) such Trust, (x) such Trust Property, (y) Certificateholders of such Trust or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property of such Trust, and (ii) which would be avoided if the Trustee were located in 47 41 another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax in respect of any Trust if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee of any Trust, or if a vacancy shall occur in the office of the Trustee of any Trust for any cause, the Company shall promptly appoint a successor Trustee of such Trust. If, within one year after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee of such Trust shall be appointed by Act of the Certificateholders of the related series holding Certificates of such series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in such Trust delivered to the Company, the related Owner Trustees, the related Indenture Trustee and the retiring Trustee, the successor Trustee so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee of such Trust and supersede the successor Trustee of such Trust appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder of the related series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee of such Trust. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders of the related series as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee with respect to any or all Trusts an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee with respect to such Trusts shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee in respect of such Trusts hereunder, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the 48 42 retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. If a successor Trustee is appointed with respect to one or more (but not all) Trusts, the Company, the predecessor Trustee and each successor Trustee with respect to any Trust shall execute and deliver a supplemental agreement hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Trusts as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Basic Agreement and the applicable Trust Supplements as shall be necessary to provide for or facilitate the administration of the Trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental agreement shall constitute such Trustees co-Trustees of the same Trust and that each such Trustee shall be Trustee of separate Trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VII. Section 7.10. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. Maintenance of Agencies. (a) With respect to each series of Certificates, there shall at all times be maintained in the Borough of Manhattan, The City of New York, an office or agency where Certificates of such series may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates or of the related Trust Supplement may be served. 49 43 Such office or agency shall be initially Fleet National Bank c/o Shawmut Trust Company, 14 Wall Street, New York, New York 10005. Written notice of the location of each such other office or agency and of any change of location thereof shall be given by the Trustee to the Company, any Owner Trustees, the Indenture Trustees and the Certificateholders of such series. In the event that no such office or agency shall be maintained or no such notice of location or of change of location shall be given, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates of each series. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by Federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates of each series. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, any related Owner Trustees and the related Indenture Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose 50 44 agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, any related Owner Trustees and the related Indenture Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders of the related series as their names and addresses appear on the Register for such series. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. Money for Certificate Payments to Be Held in Trust. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. Registration of Equipment Notes in Trustee's Name. Subject to Section 12.04, the Trustee agrees that all Equipment Notes, and Permitted Investments, if any, shall be issued in the name of the Trustee as trustee for the applicable Trust or its nominee and held by the Trustee, or, if not so held, the Trustee or its nominee shall be reflected as the owner of such Equipment Notes or Permitted Investments as the case may be, in the register of the issuer of such Equipment Notes or Permitted Investments. Section 7.14. Representations and Warranties of Trustee. The Trustee hereby represents and warrants that: (a) the Trustee is a national banking association organized and validly existing and in good standing under the laws of the United States of America; (b) the Trustee has full power, authority and legal right to execute, deliver, and perform this Agreement, any Intercreditor Agreement and the Refunding Agreements and has taken all necessary action to authorize the execution, delivery, and performance by it of this Agreement, any Intercreditor Agreement and the Refunding Agreements; 51 45 (c) the execution, delivery and performance by the Trustee of this Agreement, any Intercreditor Agreement and the Refunding Agreements (i) will not violate any provision of any United States federal law or the law of the State of Connecticut, in each case, governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator, or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the execution, delivery and performance by the Trustee of this Agreement, any Intercreditor Agreement and the Refunding Agreements will not require the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Connecticut regulating the banking and corporate trust activities of the Trustee; and (e) this Agreement, any Intercreditor Agreement and the Refunding Agreements have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. Withholding Taxes; Information Reporting. As to the Certificates of any series, the Trustee, as trustee of the related grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates of such series any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates of such series, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders of such series, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible 52 46 after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof together with such additional documentary evidence as such Certificateholders of such series may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. Section 7.16. Trustee's Liens. The Trustee in its individual capacity agrees that it will in respect of each Trust created by this Agreement at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property of such Trust which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the related Refunding Agreements or the related Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions by the Trustee which are in breach of this Agreement. Section 7.17. Preferential Collection of Claims. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders. The Company will furnish to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders of such series, in each case as of a date not more than 15 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the sole Registrar for such series, no such list need be furnished; and provided, further, however, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. Preservation of Information; Communications to Certificateholders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders of each series contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and 53 47 the names and addresses of Certificateholders of each series received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. Reports by Trustee. Within 60 days after May 15 of each year commencing with the first full year following the issuance of any series of Certificates, the Trustee shall transmit to the Certificateholders of each series, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. Reports by the Company. The Company shall: (a) file with the Trustee, within 30 days after the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act such summaries of any information, documents and reports required to be filed by the Company pursuant to Subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting 54 48 officer as to his or her knowledge of the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder upon request, the annual audited and quarterly unaudited financial statements of the Company which are provided to the Trustee. ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of Certificateholders. Without the consent of the Certificateholders, the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to any Intercreditor Agreement, any Refunding Agreement or any Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to provide for the formation of a Trust, the issuance of a series of certificates and the other matters contemplated by Section 2.01(b); or (2) to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company herein contained; or (3) to add to the covenants of the Company for the benefit of the Certificateholders of any series, or to surrender any right or power in this Agreement conferred upon the Company; or (4) to correct or supplement any provision in this Agreement, any Intercreditor Agreement, any Refunding Agreement, any Liquidity Facility or any Indenture which may be defective or inconsistent with any other provision herein or in any Trust Supplement or to cure any ambiguity, correct any mistake or to modify any other provisions with respect to matters or questions arising under this Agreement, any Intercreditor Agreement, any Refunding Agreement, any Liquidity Facility or any Indenture, provided that any such action shall not adversely affect the interests of the Certificateholders of any series; or (5) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to 55 49 add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (6) to evidence and provide for the acceptance of appointment under this Agreement by a successor Trustee with respect to one or more Trusts and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trusts hereunder and thereunder by more than one Trustee, pursuant to the requirements of Section 7.09; or (7) to make any other amendments or modifications hereto, provided such amendments or modifications shall only apply to Certificates of one or more series to be thereafter issued; provided, however, that no such supplemental agreement shall adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. The Trustee shall be entitled to rely upon an Opinion of Counsel to such effect. Section 9.02. Supplemental Agreements with Consent of Certificateholders. With respect to each separate Trust and the series of Certificates relating thereto, with the consent of the Certificateholders holding Certificates of any series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in such Trust, by Act of said Certificate-holders delivered to the Company and the Trustee, the Company may (with the consent of the Owner Trustee, if any, relating to such certificates, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, any Intercreditor Agreement, any Liquidity Facility or any Refunding Agreement to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement; provided, however, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee of payments on the Equipment Notes held in such Trust or distributions that are required to be made herein on any Certificate of such series, or change any date of payment of any Certificate of such series, or change the place of payment where, or the coin or currency in which, any Certificate of such series is 56 50 payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note in the Trust Property of such Trust except as permitted by this Agreement or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in such Trust; or (3) alter the priority of distributions specified in any Intercreditor Agreement; or (4) reduce the specified percentage of the aggregate Fractional Undivided Interests of such Trust which is required for any such supplemental agreement, or reduce such specified percentage required for any waiver (of compliance with certain provisions of this Agreement or certain defaults hereunder and their consequences) provided for in this Agreement; (5) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate or such series affected thereby; or (6) adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. It shall not be necessary for any Act of such Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. Documents Affecting Immunity or Indemnity. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Basic Agreement or any Trust Supplement, the Trustee may in its discretion decline to execute such document. Section 9.04. Execution of Supplemental Agreements. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trusts created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. 57 51 Section 9.05. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement under this Article, this Basic Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Basic Agreement for all purposes; and every Certificateholder of each series theretofore or thereafter authenticated and delivered hereunder shall be bound thereby to the extent applicable to such series. Section 9.06. Conformity with Trust Indenture Act. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. Reference in Certificates to Supplemental Agreements. Certificates of each series authenticated and delivered after the execution of any supplemental agreement applicable to such series pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates of such series after proper presentation and demand. ARTICLE X AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indenture and Other Note Documents. In the event that the Trustee, as holder of any Equipment Notes in trust for the benefit of the Certificateholders of any series or as Controlling Party, receives a request for a consent to any amendment, modification, waiver or supplement under any Indenture or other Note Document the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder of such series registered on the Register as of the date of such notice. The Trustee shall request from Certificateholders of such series a Direction as to (a) whether or not to take or refrain from taking any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note and (c) how to vote any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (i) the aggregate face amounts of all Certificates of such series actually voted in favor of or for giving consent to such action by Acts of Certificateholders to (ii) the aggregate face amount of all Outstanding Certificates. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing 58 52 such Holder's consent to such Direction on or prior to the Business Day before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and any Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction consent and notify the relevant Indenture Trustee of such consent to any amendment, modification, waiver or supplement under the relevant Indenture or any Note Document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment modification or waiver will not adversely affect the interests of the Certificateholders. ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the Trusts. In respect of each Trust created by the Basic Agreement as supplemented by a related Trust Supplement, the respective obligations and responsibilities of the Company and the Trustee created under this Agreement with respect to the Trust created hereby and such Trust shall terminate upon the distribution to all Holders of the Certificates of the series of such Trust and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property of the related series of such Trust; provided, however, that in no event shall such Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Notice of any termination of a Trust, specifying the applicable Regular Distribution Date (or applicable Special Distribution Date, as the case may be) upon which the Certificateholders of any series may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly by the Trustee to Certificateholders of such series not earlier than the minimum number of days and not more than the maximum number of days specified therefor in the related Trust Supplement preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates of such series will be made upon presentation and surrender of Certificates of such series at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates of such series at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders of such series. Upon presentation and surrender of the Certificates of such series in accordance with such notice, the Trustee shall cause to be distributed to Certificateholders of such series amounts distributable on such 59 53 Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders of such series shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders of such series to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be) specified in the first written notice. In the event that any money held by the Trustee for the payment of distributions on the Certificates of such series shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Indenture Trustee the appropriate amount of money relating to such Indenture Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of Certificateholders. The death or incapacity of any Certificateholder of any series shall not operate to terminate this Agreement, or the related Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. Liabilities of Certificateholders. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. Certificates Nonassessable and Fully Paid. Certificateholders of each series shall not be personally liable for obligations of the related Trust, the Fractional Undivided Interests represented by the Certificates of such series shall be nonassessable for any losses or expenses of such Trust or for any reason whatsoever, and Certificates of such series upon authentication thereof by the Trustee pursuant to Section 3.02 are and shall be deemed fully paid. No Certificateholder of such series shall have any right (except as expressly provided herein) to vote or in any manner otherwise 60 54 control the operation and management of the related Trust Property, the related Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates of such series, be construed so as to constitute the Certificateholders of such series from time to time as partners or members of an association. Section 12.04. Registration of Equipment Notes in Name of Subordination Agent. If a Trust is party to an Intercreditor Agreement, the Trustee agrees that all Equipment Notes to be purchased by such Trust shall be issued in the name of the Subordination Agent under such Intercreditor Agreement or its nominee and held by such Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, such Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 12.05. Notices. (a) Unless otherwise specifically provided herein or in the applicable Trust Supplement with respect to any Trust, all notices required under the terms and provisions of this Basic Agreement or such Trust Supplement with respect to such Trust shall be in English and in writing and any such notice may be given by United States mail, courier service, telegram, telex, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telex, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, if to the Company, to: Mail: America West Airlines, Inc. 4000 East Sky Harbor Boulevard Phoenix, Arizona 85043 Attention: Senior Vice President-Legal Affairs Facsimile: (602) 693-5904 if to the Trustee, to: Mail: Fleet National Bank 777 Main Street Hartford, Connecticut 06115 Attention: Corporate Trust Administration - Responsible Officer - America West Airlines Pass Through Trusts under the Pass Through Trust Agreement dated November 26, 1996 Facsimile: (860) 986-7920 61 55 Telephone: (860) 986-4545 Any such notice shall be effective when received. (b) The Company or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders of any series shall be mailed by first-class mail to the addresses for Certificateholders of such series shown on the Register kept by the Registrar and to addresses filed with the Trustee for Certificate Owners of such series. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders or Certificate Owners of such series. (d) If the Company mails a notice or communication to the Certificateholders of such series, it shall mail a copy to the Trustee and to each Paying Agent for such series at the same time. (e) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (f) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Indenture Trustee. Section 12.06. Governing Law. THIS BASIC AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND, TOGETHER WITH ALL TRUST SUPPLEMENTS AND CERTIFICATES, SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 12.07. Severability of Provisions. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or any Trust or of the Certificates of any series or the rights of the Certificateholders thereof. Section 12.08. Trust Indenture Act Controls. This Agreement is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions. Section 12.09. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table 62 56 of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by the Trustee and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and permitted assigns, whether so expressed or not. Section 12.11. Benefits of Agreement. Nothing in this Agreement or in the Certificates of any series, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders of each series, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. Legal Holidays. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate of any series shall not be a Business Day with respect to such series, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. Counterparts. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original and all of which counterparts shall constitute but one and the same instrument. Section 12.14. Communication by Certificateholders with Other Certificateholders. Certificateholders of any series may communicate with other Certificateholders of such series with respect to their rights under this Basic Agreement, the related Trust Supplement or the Certificates of such series pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. Section 12.15. Intention of Parties. The parties hereto intend that any Trust created hereunder be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. The powers granted and obligations undertaken pursuant to this Agreement shall be so construed so as to further such intent. 63 57 IN WITNESS WHEREOF, the Company and the Trustee have caused this Basic Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:___________________________ Name:_________________________ Title:________________________ FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ 64 EXHIBIT A FORM OF CERTIFICATE (1)[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] AMERICA WEST AIRLINES PASS THROUGH TRUST _________________ Pass Through Certificate, Series___________ Issuance Date: _____________ __, ____ Final Distribution Date: ______________, ____ evidencing a fractional undivided interest in a trust, the property of which includes certain equipment notes each secured by one or more Aircraft or Spare Engines owned by or leased to America West Airlines, Inc. Certificate No.__________ $__________ Fractional Undivided Interest representing ________% of the Trust per $1,000 of Reference Principal Amount THIS CERTIFIES THAT ___________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of $________________ (_________________ dollars) (the "Reference Principal Amount") in the America West Airlines Pass Through Trust _____________ (the "Trust") created by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of November __, 1996 (the "Basic Agreement") between the Trustee and America West Airlines, Inc., a Delaware corporation (the "Company"), as supplemented by Trust Supplement No.________ thereto dated ____________, ____ (collectively, the "Agreement"), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "America West - ---------- (1) This legend to appear on Book-Entry Certificates to be deposited with The Depository Trust Company. One Certificate may be issued in definitive form which shall not have this legend. 65 2 Airlines Pass Through Certificates, Series _________" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions, and conditions of the Agreement and any Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive any payments under any Intercreditor Agreement or Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in aircraft or spare engines leased to or owned by the Company. The Certificates represent fractional undivided interests in the Trust and the Trust Property, and have no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other America West Airlines Pass Through Certificates, Series [____] was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other America West Airlines Pass Through Certificates, Series [____] and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and any Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each ________and _____________ (a "Regular Distribution Date"), commencing on ______________, ____, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee 66 3 shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right or payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the entire Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate 67 4 for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 Fractional Undivided Interest and integral multiples thereof, provided that one Certificate may be in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. 68 5 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICA WEST AIRLINES PASS THROUGH TRUST By: FLEET NATIONAL BANK, as Trustee By______________________________ Name:___________________________ Title:__________________________ Dated:_______________ 69 6 [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. FLEET NATIONAL BANK, as Trustee By:_________________________________ Name:_______________________________ Title:______________________________ EX-4.2 3 FORM OF TRUST SUPPLEMENT NO. 1996-1A 1 EXHIBIT 4.2 This Trust Supplement No. 1996-1A, dated as of November 26, 1996 (herein called the "Trust Supplement"), between America West Airlines, Inc., a Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"), to the Pass Through Trust Agreement, dated as of November 26, 1996, between the Company and the Trustee (the "Basic Agreement"). W I T N E S S E T H: WHEREAS, the Basic Agreement, unlimited as to the aggregate principal amount of Certificates (unless otherwise specified herein, capitalized terms used herein without definition having the respective meanings specified heretofore in the Basic Agreement) which may be issued thereunder, has heretofore been executed and delivered: WHEREAS, each Owner Trustee, acting on behalf of its respective Owner Participant, will issue, on a non-recourse basis, Equipment Notes, among other things, to refinance the outstanding debt portion of the purchase price of the aircraft and spare engines purchased by such Owner Trustee and leased to the Company pursuant to the related Lease; WHEREAS, pursuant to the terms and conditions of the Basic Agreement as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall purchase such Equipment Notes issued by each Owner Trustee having the same interest rate as, and final maturity dates not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Notes in trust for the benefit of the Certificateholders; WHEREAS, the Trustee hereby declares the creation of the America West Airlines Pass Through Trust 1996-1A (the "1996-1A Trust") for the benefit of the Certificateholders, and the initial Certificateholders as the grantors of the 1996-1A Trust, by their respective acceptances of the Certificates, join in the creation of this 1996-1A Trust with the Trustee; WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized; WHEREAS, this Trust Supplement is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by such provisions; NOW THEREFORE, in consideration of the premises herein, it is agreed between the Company and the Trustee as follows: Series 1996-1A Trust Supplement 2 2 ARTICLE I THE CERTIFICATES Section 1.01. The Certificates. There is hereby created a series of Certificates to be issued under the Agreement to be distinguished and known as "America West Airlines Pass Through Certificates, Series 1996-1A" (hereinafter defined as the "Series 1996-1A Certificates"). Each Series 1996-1A Certificate represents a Fractional Undivided Interest in the 1996-1A Trust created hereby. The terms and conditions applicable to the Series 1996-1A Certificates are as follows: (a) The aggregate principal amount of the Series 1996-1A Certificates that shall be authenticated under the Agreement (which limit shall not pertain to Series 1996-1A Certificates authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Series 1996-1A Certificates pursuant to Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial issuance is $99,522,000. The parties hereto acknowledge that the provisions of Section 2.02(b) of the Basic Agreement are of no force or effect with respect to the Series 1996-1A Certificates. (b) The Regular Distribution Dates with respect to any payment of Scheduled Payments means each January 2 and July 2 commencing January 2, 1997, until payment of all of the Scheduled Payments to be made under the Equipment Notes has been made. (c) The Final Legal Distribution Date is January 2, 2011. (d) The Special Distribution Date with respect to a Special Payment shall be the date specified as such in the notice which the Trustee must give with respect to such Special Payment pursuant to Section 4.02(c) of the Basic Agreement, which date shall be the date specified as the Special Distribution Date (as defined in the Intercreditor Agreement) with respect to the related Special Payment (as defined in the Intercreditor Agreement) in the applicable written notice given to the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement. (e) (i) The Series 1996-1A Certificates shall be substantially in the form attached hereto as Exhibit A. (ii) The Series 1996-1A Certificates shall be Book- Entry Certificates. Series 1996-1A Trust Supplement 3 3 (f) The Scheduled Payments of principal shall be as set forth in Exhibit B. (g) The proceeds of the Series 1996-1A Certificates shall be used to purchase the Series A Equipment Notes in the principal amount specified below:
Equipment Note Principal Amount Maturity -------------- ---------------- -------- N624AW-A $11,936,661 July 2, 2005 N626AW-A 11,936,662 January 2, 2006 N631AW-A 11,936,662 January 2, 2006 N633AW-A 12,089,958 January 2, 2009 N634AW-A 11,897,518 January 2, 2009 N635AW-A 11,897,518 January 2, 2009 N636AW-A 11,897,518 January 2, 2009 N637AW-A 11,897,518 January 2, 2009 V0025-A 1,343,995 July 2, 2009 V0049-A 1,343,995 July 2, 2009 V0019-A 1,343,995 July 2, 2009
(h) Each Owner Trustee, acting on behalf of its respective Owner Participant, will issue on a non-recourse basis, the Equipment Notes, the proceeds of which shall be used, among other things, to refinance the outstanding debt portion of the purchase price to such Owner Trustee of the following Equipment: U.S. Registration Number/Manufacturer's Equipment Serial Number --------- --------------------- Airbus A320-231 N624AW/55 Airbus A320-231 N626AW/65 Airbus A320-231 N631AW/77 Airbus A320-231 N633AW/82 Airbus A320-231 N634AW/091 Airbus A320-231 N635AW/092 Airbus A320-231 N636AW/098 Airbus A320-231 N637AW/099 IAE V2500 NA/V0025 IAE V2500 NA/V0049 IAE V2500 NA/V0019 Series 1996-1A Trust Supplement 4 4 (i) The related Note Documents are listed on Exhibit C. (j) (i) The Trustee and the Other Trustees are parties to the Intercreditor Agreement which sets forth certain terms of subordination and other matters. The Series 1996-1A Certificates are senior in right of payment to the America West Airlines Pass Through Certificates, Series 1996-1B, the America West Airlines Pass Through Certificates, Series 1996-1C, the America West Airlines Pass Through Certificates, Series 1996-1D and the America West Airlines Pass Through Certificates, Series 1996-1E. (ii) The Series 1996-1A Certificates may be purchased by the holders of certain series of Certificates with a lower seniority as provided in Article III hereof and as further set forth in Section 6.01(b) of the Basic Agreement. (k) Notice of any termination of the 1996-1A Trust shall be mailed promptly by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution. ARTICLE II DEFINITIONS Section 2.01. Definitions. For all purposes of the Basic Agreement as supplemented by this Trust Supplement, the following capitalized term has the following meaning: Intercreditor Agreement: Means the Intercreditor Agreement dated as of the date hereof among the Trustee, the Other Trustees, the Liquidity Providers named therein and Fleet National Bank, as Subordination Agent, as amended, supplemented or otherwise modified from time to time in accordance its terms. Liquidity Facility: Means, initially, the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between Fleet National Bank, as Subordination Agent, as agent and trustee for the 1996-1A Trust, and Kredietbank N.V., acting through its New York branch, and, from and after the replacement of such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms. Other Agreements: Means (i) the Basic Agreement as supplemented by Trust Supplement No. 1996-1B dated the date Series 1996-1A Trust Supplement 5 5 hereof relating to America West Airlines 1996-1B Pass Through Trust, (ii) the Basic Agreement as supplemented by Trust Supplement No. 1996-1C dated the date hereof relating to America West Airlines 1996-1C Pass Through Trust, (iii) the Basic Agreement as supplemented by Trust Supplement No.1996-1D dated the date hereof relating to America West Airlines 1996-1D Pass Through Trust and (iv) the Basic Agreement as supplemented by Trust Supplement No. 1996-E dated the date hereof relating to America West Airlines 1996-1E Pass Through Trust. Other Trustees: Means the trustee under the Other Agreements, and any successor or other trustee appointed as provided therein. PTC Event of Default: Means the failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance of the Series 1996-1A Certificates on the Final Legal Distribution Date for such Certificates or (ii) interest due on such Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the holders of the Certificates entitled thereto). Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture), including Overdue Scheduled Payments (as defined in the Intercreditor Agreement), payments in respect of the redemption or repurchase of any Equipment Note and payments in respect of the sale, of any Equipment Note to the related Owner Trustee, Owner Participant or any other Person. Trust Property: Means (i) the Equipment Notes held as the property of the Trust and all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account, and (iii) all rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement and the Liquidity Facility, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Trustee on behalf of the Trust pursuant to the Intercreditor Agreement or the Liquidity Facility. Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc. Series 1996-1A Trust Supplement 6 6 ARTICLE III PURCHASE RIGHTS OF CERTIFICATEHOLDERS Section 3.01. By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, (i) each Class B Certificateholder shall have the right to purchase all, but not less than all, of the Series 1996-1A Certificates upon ten days' written notice to the Trustee and each other Class B Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class B Certificateholder notifies such purchasing Class B Certificateholder that such other Class B Certificateholder wants to participate in such purchase, then such other Class B Certificateholder may join with the purchasing Class B Certificateholder to purchase all, but not less than all, of the Series 1996-1A Certificates pro rata based on the Fractional Undivided Interest in the Class B Trust held by each such Class B Certificateholder and (B) if prior to the end of such ten day period any other Class B Certificateholder fails to notify the purchasing Class B Certificateholder of such other Class B Certificateholder's desire to participate in such a purchase, then such other Class B Certificateholder shall lose its right to purchase the Series 1996-1A Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement; and (ii) each Class C Certificateholder shall have the right (which shall not expire upon any purchase of the Series 1996-1A Certificates pursuant to clause (i) above) to purchase all, but not less than all, of the Series 1996-1A Certificates and the Class B Certificates upon ten days' written notice to the Trustee, the Class B Trustee and each other Class C Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class C Certificateholder notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Series 1996-1A Certificates and the Class B Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder Series 1996-1A Trust Supplement 7 7 shall lose its right to purchase the Series 1996-1A Certificates and the Class B Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement; and (iii) each Class D Certificateholder shall have the right (which shall not expire upon any purchase of the Series 1996-1A Certificates pursuant to clause (i) above or the purchase of the Series 1996-1A Certificates and the Class B Certificates pursuant to clause (ii) above) to purchase all, but not less than all, of the Series 1996-1A Certificates, the Class B Certificates and the Class C Certificates upon ten days' written notice to the Trustee, the Class B Trustee, the Class C Trustee and each other Class D Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class D Certificateholder notifies such purchasing Class D Certificateholder that such other Class D Certificateholder wants to participate in such purchase, then such other Class D Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Series 1996-1A Certificates, the Class B Certificates and the Class C Certificates pro rata based on the Fractional Undivided Interest in the Class D Trust held by each such Class D Certificateholder and (B) if prior to the end of such ten day period any other Class D Certificateholder fails to notify the purchasing Class D Certificateholder of such other Class D Certificateholder's desire to participate in such a purchase, then such other Class D Certificateholder shall lose its right to purchase the Series 1996-1A Certificates, the Class B Certificates, and the Class C Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement; and (iv) each Class E Certificateholder shall have the right (which shall not expire upon any purchase of the Series 1996-1A Certificates pursuant to clause (i) above, the purchase of the Series 1996-1A Certificates and the Class B Certificates pursuant to clause (ii) above or the purchase of the Series 1996-1A Certificates, the Class B Certificates and Class C Certificates pursuant to clause (iii) above) to purchase all, but not less than all, of the Series 1996-1A Certificates, the Class B Certificates, the Class C Certificates and the Class D Certificates upon ten days' written notice to the Trustee, the Class B Trustee, the Class C Trustee, the Class D Trustee and each other Class E Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class E Certificateholder notifies such purchasing Class E Certificateholder that such other Class E Certificateholder wants to participate in such purchase, then such other Class E Certificateholder may join with the Series 1996-1A Trust Supplement 8 8 purchasing Certificateholder to purchase all, but not less than all, of the Series 1996-1A Certificates, the Class B Certificates, the Class C Certificates and the Class D Certificates pro rata based on the Fractional Undivided Interest in the Class E Trust held by each such Class E Certificateholder and (B) if prior to the end of such ten day period any other Class E Certificateholder fails to notify the purchasing Class E Certificateholder of such other Class E Certificateholder's desire to participate in such a purchase, then such other Class E Certificateholder shall lose its right to purchase the Series 1996-1A Certificates, the Class B Certificates, the Class C Certificates and the Class D Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement. As used in this Article III, the terms "Class B Certificate", "Class B Certificateholder", "Class B Trust", "Class B Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust", "Class C Trustee", "Class D Certificate", "Class D Certificateholder", "Class D Trust", "Class D Trustee", "Class E Certificateholder" and "Class E Trust" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. ARTICLE IV THE TRUSTEE Section 4.01. The Trustee. The Trustee is hereby directed to execute and deliver the Intercreditor Agreement on or prior to the Issuance Date in the form delivered to the Trustee by the Company. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Trust Supplement or the due execution hereof by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed by the Trustee by reason of this Trust Supplement other than as set forth in the Basic Agreement, and this Trust Supplement is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Basic Agreement, upon the effectiveness thereof, as fully to all intents as if the same were herein set forth at length. The Trustee represents and warrants that the Intercreditor Agreement will be duly executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Series 1996-1A Trust Supplement 9 9 ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01. Basic Agreement Ratified. Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument. Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES 1996-1A CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 5.03. Execution in Counterparts. This Trust Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. Series 1996-1A Trust Supplement 10 10 IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized, as of the day and year first written above. AMERICA WEST AIRLINES, INC. By:__________________________ Name:________________________ Title:_______________________ FLEET NATIONAL BANK, as Trustee By:__________________________ Name:________________________ Title:_______________________ Series 1996-1A Trust Supplement 11 EXHIBIT A FORM OF CERTIFICATE [Include on each Certificate that is a Global Certificate: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1) AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1A Pass Through Certificate, Series 1996-1A Issuance Date: November 26, 1996 Final Legal Distribution Date: January 2, 2011 Evidencing A Fractional Undivided Interest In the 1996-1A Trust, The Property Of Which Includes Certain Equipment Notes Each Secured By An Aircraft or Spare Engine Leased To America West Airlines, Inc. Certificate No.___ $_____________ Fractional Undivided Interest representing 0._ % of the Trust per $1,000 of Reference Principal Amount CUSIP No. 023654-AA4 THIS CERTIFIES THAT _________________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of $____________________(the "Reference Principal Amount") in the America West Airlines Pass Through Trust 1996-1A (the "Trust") created by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of November 26, 1996 (the "Basic Agreement"), between the Trustee and America West Airlines, Inc., a Delaware corporation (the "Company"), as supplemented by Trust Supplement No. 1996-1A thereto, dated as of November 26, 1996 (collectively, the "Agreement"), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "America West Airlines Pass Through - -------- (1) Not necessarily applicable in respect of one Certificate in definitive form. Series 1996-1A Trust Supplement 12 2 Certificates, Series 1996-1A" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in the Equipment leased to the Company. Each of the Certificates represents a Fractional Undivided Interest in the Trust and the Trust Property and has no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other America West Airlines Pass Through Certificates, Series 1996-1A, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other America West Airlines Pass Through Certificates, Series 1996-1A and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 2 and July 2 (a "Regular Distribution Date") commencing January 2, 1997 to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same Series 1996-1A Trust Supplement 13 3 force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent an obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth herein and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the entire Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment Series 1996-1A Trust Supplement 14 4 thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 Fractional Undivided Interests and integral multiples thereof, provided that one Certificate may be in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. Series 1996-1A Trust Supplement 15 5 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1A By: FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Dated: _____________ Series 1996-1A Trust Supplement 16 [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Series 1996-1A Trust Supplement 17 EXHIBIT B REGULAR DISTRIBUTION DATES AND SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment - ------------------------- ----------------- January 2, 1997 $ 0 July 2, 1997 957,998 January 2, 1998 0 July 2, 1998 1,929,223 January 2, 1999 600,275 July 2, 1999 1,901,888 January 2, 2000 0 July 2, 2000 1,771,423 January 2, 2001 478,258 July 2, 2001 1,771,420 January 2, 2002 817,344 July 2, 2002 3,062,904 January 2, 2003 4,212,911 July 2, 2003 5,412,429 January 2, 2004 4,590,437 July 2, 2004 5,873,809 January 2, 2005 5,170,154 July 2, 2005 5,883,786 January 2, 2006 8,345,111 July 2, 2006 9,115,653 January 2, 2007 9,427,862 July 2, 2007 8,908,893 January 2, 2008 7,676,294 July 2, 2008 6,347,996 January 2, 2009 4,342,646 July 2, 2009 923,286
Series 1996-1A Trust Supplement 18 EXHIBIT C Related Note Documents Series 1996-1A Trust Supplement EX-4.3 4 FORM OF TRUST SUPPLEMENT NO. 1996-1B 1 EXHIBIT 4.3 This Trust Supplement No. 1996-1B, dated as of November 26, 1996 (herein called the "Trust Supplement"), between America West Airlines, Inc., a Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"), to the Pass Through Trust Agreement, dated as of November 26, 1996, between the Company and the Trustee (the "Basic Agreement"). W I T N E S S E T H: WHEREAS, the Basic Agreement, unlimited as to the aggregate principal amount of Certificates (unless otherwise specified herein, capitalized terms used herein without definition having the respective meanings specified heretofore in the Basic Agreement) which may be issued thereunder, has heretofore been executed and delivered: WHEREAS, each Owner Trustee, acting on behalf of its respective Owner Participant, will issue, on a non-recourse basis, Equipment Notes, among other things, to refinance the outstanding debt portion of the purchase price of the aircraft and spare engines purchased by such Owner Trustee and leased to the Company pursuant to the related Lease; WHEREAS, pursuant to the terms and conditions of the Basic Agreement as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall purchase such Equipment Notes issued by each Owner Trustee having the same interest rate as, and final maturity dates not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Notes in trust for the benefit of the Certificateholders; WHEREAS, the Trustee hereby declares the creation of the America West Airlines Pass Through Trust 1996-1B (the "1996-1B Trust") for the benefit of the Certificateholders, and the initial Certificateholders as the grantors of the 1996-1B Trust, by their respective acceptances of the Certificates, join in the creation of this 1996-1B Trust with the Trustee; WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized; WHEREAS, this Trust Supplement is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by such provisions; NOW THEREFORE, in consideration of the premises herein, it is agreed between the Company and the Trustee as follows: Series 1996-1B Trust Supplement 2 2 ARTICLE I THE CERTIFICATES Section 1.01. The Certificates. There is hereby created a series of Certificates to be issued under the Agreement to be distinguished and known as "America West Airlines Pass Through Certificates, Series 1996-1B" (hereinafter defined as the "Series 1996-1B Certificates"). Each Series 1996-1B Certificate represents a Fractional Undivided Interest in the 1996-1B Trust created hereby. The terms and conditions applicable to the Series 1996-1B Certificates are as follows: (a) The aggregate principal amount of the Series 1996-1B Certificates that shall be authenticated under the Agreement (which limit shall not pertain to Series 1996-1B Certificates authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Series 1996-1B Certificates pursuant to Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial issuance is $37,129,000. The parties hereto acknowledge that the provisions of Section 2.02(b) of the Basic Agreement are of no force or effect with respect to the Series 1996-1B Certificates. (b) The Regular Distribution Dates with respect to any payment of Scheduled Payments means each January 2 and July 2 commencing January 2, 1997, until payment of all of the Scheduled Payments to be made under the Equipment Notes has been made. (c) The Final Legal Distribution Date is July 2, 2009. (d) The Special Distribution Date with respect to a Special Payment shall be the date specified as such in the notice the Trustee must give with respect to such Special Payment pursuant to Section 4.02(c) of the Basic Agreement, which date shall be the date specified as the Special Distribution Date (as defined in the Intercreditor Agreement) with respect to the related Special Payment (as defined in the Intercreditor Agreement) in the applicable written notice given to the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement. (e) (i) The Series 1996-1B Certificates shall be substantially in the form attached hereto as Exhibit A. Each purchaser of Series 1996-1B Certificates will be deemed to represent that either (A) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of a Series 1996-1B Trust Supplement 3 3 plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), have not been used to purchase Series 1996-1B Certificates or (B) the purchase and holding of Series 1996-1B Certificates is exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to Prohibited Transaction Class Exemption 95-60 (promulgated under ERISA and the Code). (ii) The Series 1996-1B Certificates shall be Book- Entry Certificates. (f) The Scheduled Payments of principal shall be as set forth in Exhibit B. (g) The proceeds of the Series 1996-1B Certificates shall be used to purchase the Series B Equipment Notes in the principal amount specified below:
Equipment Note Principal Amount Maturity -------------- ---------------- -------- N624AW-B 4,476,247 January 2, 2002 N626AW-B 4,476,246 July 2, 2002 N631AW-B 4,476,246 July 2, 2002 N633AW-B 4,533,177 January 2, 2008 N634AW-B 4,413,774 July 2, 2005 N635AW-B 4,413,774 July 2, 2005 N636AW-B 4,413,774 July 2, 2005 N637AW-B 4,413,774 July 2, 2005 V0025-B 503,996 January 2, 2006 V0049-B 503,996 January 2, 2006 V0019-B 503,996 January 2, 2006
(h) Each Owner Trustee, acting on behalf of its respective Owner Participant, will issue on a non-recourse basis, the Equipment Notes, the proceeds of which shall be used,among other things, to refinance the outstanding debt portion of the purchase price to such Owner Trustee of the following Equipment: Series 1996-1B Trust Supplement 4 4
U.S. Registration Number/Manufacturer's Equipment Serial Number --------- --------------------- Airbus A320-231 N624AW/55 Airbus A320-231 N626AW/65 Airbus A320-231 N631AW/77 Airbus A320-231 N633AW/82 Airbus A320-231 N634AW/091 Airbus A320-231 N635AW/092 Airbus A320-231 N636AW/098 Airbus A320-231 N637AW/099 IAE V2500 NA/V0025 IAE V2500 NA/V0049 IAE V2500 NA/V0019
(i) The related Note Documents are listed on Exhibit C. (j) (i) The Trustee and the Other Trustees are parties to the Intercreditor Agreement which sets forth certain terms of subordination and other matters. The Series 1996-1B are junior in right of payment to the America West Airlines Pass Through Certificates, Series 1996-1A and senior in right of payment to the America West Airlines Pass Through Certificates, Series 1996-1C, the America West Airlines Pass Through Certificates, Series 1996-1D and the America West Airlines Pass Through Certificates, Series 1996-1E. (ii) The holders of Series 1996-1B Certificates may purchase America West Airlines Pass Through Certificates, Series 1996-1A and the Series 1996-1B Certificates may be purchased by the holders of certain series of Certificates with a lower seniority as provided in Article III hereof and as further set forth in Section 6.01(b) of the Basic Agreement. (k) Notice of the termination of the Series 1996-1B Trust shall be mailed promptly by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution. Series 1996-1B Trust Supplement 5 5 ARTICLE II DEFINITIONS Section 2.01. Definitions. For all purposes of the Basic Agreement as supplemented by this Trust Supplement, the following capitalized term has the following meaning: Intercreditor Agreement: Means the Intercreditor Agreement dated as of the date hereof among the Trustee, the Other Trustees, the Liquidity Providers named therein and Fleet National Bank, as Subordination Agent, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Liquidity Facility: Means, initially, the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between Fleet National Bank, as Subordination Agent, as agent and trustee for the 1996-1B Trust, and Kredietbank N.V., acting through its New York branch, and, from and after the replacement of such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms. Other Agreements: Means (i) the Basic Agreement as supplemented by Trust Supplement No. 1996-1A dated the date hereof relating to America West Airlines 1996-1A Pass Through Trust, (ii) the Basic Agreement as supplemented by Trust Supplement No. 1996-1C dated the date hereof relating to America West Airlines 1996-1C Pass Through Trust, (iii) the Basic Agreement as supplemented by Trust Supplement No.1996-1D dated the date hereof relating to America West Airlines 1996-1D Pass Through Trust and (iv) the Basic Agreement as supplemented by Trust Supplement No. 1996-1E dated the date hereof relating to America West Airlines 1996-1E Pass Through Trust. Other Trustees: Means the trustee under the Other Agreements, and any successor or other trustee appointed as provided therein. Plan Transferee: Means any Plan or other entity that is using the assets of any Plan to purchase or hold its interest in a Series 1996-1B Certificate. For purposes of this definition, a "Plan" means any employee benefit plan subject to ERISA as well as any plan that is not subject to ERISA but which is subject to Section 4975 of the Internal Revenue Code of 1986, as amended. PTC Event of Default: Means the failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance of the Series 1996-1B Certificates on the Final Legal Series 1996-1B Trust Supplement 6 6 Distribution Date for such Certificates or (ii) interest due on such Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the holders of the Certificates entitled thereto). Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture), including Overdue Scheduled Payments (as defined in the Intercreditor Agreement), payments in respect of the redemption or repurchase of any Equipment Note and payments in respect of the sale, of any Equipment Note to the related Owner Trustee, Owner Participant or any other Person. Trust Property: Means (i) the Equipment Notes held as the property of the Trust and all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account, and (iii) all rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement and the Liquidity Facility, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Trustee on behalf of the Trust pursuant to the Intercreditor Agreement or the Liquidity Facility. Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc. ARTICLE III PURCHASE RIGHTS OF CERTIFICATEHOLDERS Section 3.01. (i) At any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder shall have the right to purchase all, but not less than all, of the Class A Certificates upon ten days' written notice to the Class A Trustee and each other Certificateholder, provided that (A) if prior to the end of such ten day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates pro rata based on the outstanding principal amount of the Certificates held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the Series 1996-1B Trust Supplement 7 7 purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement. (ii) By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, (1) each Class C Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to paragraph (i) above) to purchase all, but not less than all, of the Class A Certificates and the Series 1996-1B Certificates upon ten days' written notice to the Class A Trustee, the Trustee and each other Class C Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class C Certificateholder notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Class A Certificates and the Series 1996-1B Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder shall lose its right to purchase the Class A Certificates and Series 1996-1B Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement; and (2) each Class D Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to paragraph (i) above or the purchase of the Class A Certificates and the Series 1996-1B Certificates pursuant to clause (ii)(1) above) to purchase all, but not less than all, of the Class A Certificates, the Series 1996-1B Certificates and the Class C Certificates upon ten days' written notice to the Class A Trustee, the Trustee, the Class C Trustee and each other Class D Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class D Certificateholder notifies such purchasing Class D Certificateholder that such other Class D Certificateholder wants to participate in such purchase, then such other Class D Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates, the Series Series 1996-1B Trust Supplement 8 8 1996-1B Certificates and the Class C Certificates pro rata based on the Fractional Undivided Interest in the Class D Trust held by each such Class D Certificateholder and (B) if prior to the end of such ten day period any other Class D Certificateholder fails to notify the purchasing Class D Certificateholder of such other Class D Certificateholder's desire to participate in such a purchase, then such other Class D Certificateholder shall lose its right to purchase the Class A Certificates, the Series 1996-1B Certificates, and the Class C Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement; and (3) each Class E Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to paragraph (i) above, the purchase of the Class A Certificates and the Series 1996-1B Certificates pursuant to clause (ii)(1) above or the purchase of the Class A Certificates, the Series 1996-1B Certificates and the Class C Certificates pursuant to clause (ii)(2) above) to purchase all, but not less than all, of the Class A Certificates, the Series 1996-1B Certificates, the Class C Certificates and the Class D Certificates upon ten days' written notice to the Class A Trustee, the Trustee, the Class C Trustee, the Class D Trustee and each other Class E Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class E Certificateholder notifies such purchasing Class E Certificateholder that such other Class E Certificateholder wants to participate in such purchase, then such other Class E Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates, the Series 1996-1B Certificates, the Class C Certificates and the Class D Certificates pro rata based on the Fractional Undivided Interest in the Class E Trust held by each such Class E Certificateholder and (B) if prior to the end of such ten day period any other Class E Certificateholder fails to notify the purchasing Class E Certificateholder of such other Class E Certificateholder's desire to participate in such a purchase, then such other Class E Certificateholder shall lose its right to purchase the Class A Certificates, the Series 1996-1B Certificates, the Class C Certificates and the Class D Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement. As used in this Article III, the terms "Class A Certificate", "Class A Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust", "Class C Trustee", "Class D Certificate", "Class D Certificateholder", "Class D Trust", "Class D Trustee", "Class E Certificateholder" and "Class E Series 1996-1B Trust Supplement 9 9 Trust" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. ARTICLE IV THE TRUSTEE Section 4.01. The Trustee. The Trustee is hereby directed to execute and deliver the Intercreditor Agreement on or prior to the Issuance Date in the form delivered to the Trustee by the Company. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Trust Supplement or the due execution hereof by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed by the Trustee by reason of this Trust Supplement other than as set forth in the Basic Agreement, and this Trust Supplement is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Basic Agreement, upon the effectiveness thereof, as fully to all intents as if the same were herein set forth at length. The Trustee represents and warrants that the Intercreditor Agreement will be duly executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01. Basic Agreement Ratified. Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument. Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES 1996-1B CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 5.03. Execution in Counterparts. This Trust Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. Series 1996-1B Trust Supplement 10 10 IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized, as of the day and year first written above. AMERICA WEST AIRLINES, INC. By:__________________________ Name:________________________ Title:_______________________ FLEET NATIONAL BANK, as Trustee By:__________________________ Name:________________________ Title:_______________________ Series 1996-1B Trust Supplement 11 EXHIBIT A FORM OF CERTIFICATE [Include on each Certificate that is a Global Certificate: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1) BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1B Pass Through Certificate, Series 1996-1B Issuance Date: November 26, 1996 Final Legal Distribution Date: July 2, 2009 Evidencing A Fractional Undivided Interest In the 1996-1B Trust, The Property Of Which Includes Certain Equipment Notes Each Secured By An Aircraft or Spare Engine Leased To America West Airlines, Inc. Certificate No.___ $_____________ Fractional Undivided Interest representing 0._ % of the Trust per $1,000 of Reference Principal Amount CUSIP No. 023654-AB2 THIS CERTIFIES THAT _________________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of $ ____________________(the "Reference Principal Amount") in the America West Airlines Pass Through Trust 1996-1B (the "Trust") created by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of November 26, 1996 (the "Basic Agreement"), - -------- (1) Not necessarily applicable in respect of one Certificate in definitive form. 12 2 between the Trustee and America West Airlines, Inc., a Delaware corporation (the "Company"), as supplemented by Trust Supplement No. 1996-1B thereto, dated as of November 26, 1996 (collectively, the "Agreement"), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "America West Airlines Pass Through Certificates, Series 1996-1B" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in the Equipment leased to the Company. Each of the Certificates represents a Fractional Undivided Interest in the Trust and the Trust Property and has no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other America West Airlines Pass Through Certificates, Series 1996-1B, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other America West Airlines Pass Through Certificates, Series 1996-1B and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 2 and July 2 (a "Regular Distribution Date") commencing January 2, 1997 to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate Series 1996-1B Trust Supplement 13 3 is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent an obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth herein and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the entire Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company Series 1996-1B Trust Supplement 14 4 and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 Fractional Undivided Interests and integral multiples thereof, provided, that one Certificate may be in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be Series 1996-1B Trust Supplement 15 5 distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1B By: FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Dated: ______________ Series 1996-1B Trust Supplement 16 [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Series 1996-1B Trust Supplement 17 EXHIBIT B REGULAR DISTRIBUTION DATES AND SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment - ------------------------- ----------------- January 2, 1997 $ 0 July 2, 1997 359,249 January 2, 1998 909,397 July 2, 1998 1,980,551 January 2, 1999 3,692,711 July 2, 1999 2,735,705 January 2, 2000 2,208,190 July 2, 2000 395,705 January 2, 2001 0 July 2, 2001 395,708 January 2, 2002 1,341,070 July 2, 2002 6,310,591 January 2, 2003 0 July 2, 2003 31,497 January 2, 2004 0 July 2, 2004 3,446,800 January 2, 2005 8,090,478 July 2, 2005 3,190,972 January 2, 2006 568,506 July 2, 2006 0 January 2, 2007 0 July 2, 2007 0 January 2, 2008 1,471,870
Series 1996-1B Trust Supplement 18 EXHIBIT C Related Note Documents Series 1996-1B Trust Supplement EX-4.4 5 FORM OF TRUST SUPPLEMENT NO. 1996-1C 1 EXHIBIT 4.4 This Trust Supplement No. 1996-1C, dated as of November 26, 1996 (herein called the "Trust Supplement"), between America West Airlines, Inc., a Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"), to the Pass Through Trust Agreement, dated as of November 26, 1996, between the Company and the Trustee (the "Basic Agreement"). W I T N E S S E T H: WHEREAS, the Basic Agreement, unlimited as to the aggregate principal amount of Certificates (unless otherwise specified herein, capitalized terms used herein without definition having the respective meanings specified heretofore in the Basic Agreement) which may be issued thereunder, has heretofore been executed and delivered: WHEREAS, each Owner Trustee, acting on behalf of its respective Owner Participant, will issue, on a non-recourse basis, Equipment Notes, among other things, to refinance the outstanding debt portion of the purchase price of the aircraft and spare engines purchased by such Owner Trustee and leased to the Company pursuant to the related Lease; WHEREAS, pursuant to the terms and conditions of the Basic Agreement as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall purchase such Equipment Notes issued by each Owner Trustee having the same interest rate as, and final maturity dates not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Notes in trust for the benefit of the Certificateholders; WHEREAS, the Trustee hereby declares the creation of the America West Airlines Pass Through Trust 1996-1C (the "1996-1C Trust") for the benefit of the Certificateholders, and the initial Certificateholders as the grantors of the 1996-1C Trust, by their respective acceptances of the Certificates, join in the creation of this 1996-1C Trust with the Trustee; WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized; WHEREAS, this Trust Supplement is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by such provisions; NOW THEREFORE, in consideration of the premises herein, it is agreed between the Company and the Trustee as follows: Series 1996-1C Trust Supplement 2 2 ARTICLE I THE CERTIFICATES Section 1.01. The Certificates. There is hereby created a series of Certificates to be issued under the Agreement to be distinguished and known as "America West Airlines Pass Through Certificates, Series 1996-1C" (hereinafter defined as the "Series 1996-1C Certificates"). Each Series 1996-1C Certificate represents a Fractional Undivided Interest in the 1996-1C Trust created hereby. The terms and conditions applicable to the Series 1996-1C Certificates are as follows: (a) The aggregate principal amount of the Series 1996-1C Certificates that shall be authenticated under the Agreement (which limit shall not pertain to Series 1996-1C Certificates authenticated and delivered upon registration of transfer for, or in lieu of, other Series 1996-1C Certificates pursuant to Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial issuance is $37,747,000. The parties hereto acknowledge that the provisions of Section 2.02(b) of the Basic Agreement are of no force or effect with respect to the Series 1996-1C Certificates. (b) The Regular Distribution Dates with respect to any payment of Scheduled Payments means each January 2 and July 2 commencing January 2, 1997, until payment of all of the Scheduled Payments to be made under the Equipment Notes has been made. (c) The Final Legal Distribution Date is January 2, 2006. (d) The Special Distribution Date with respect to a Special Payment shall be the date specified as such in the notice the Trustee must give with respect to such Special Payment pursuant to Section 4.02(c) of the Basic Agreement, which date shall be the date specified as the Special Distribution Date (as defined in the Intercreditor Agreement) with respect to the related Special Payment (as defined in the Intercreditor Agreement) in the applicable written notice given to the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement. (e) (i) The Series 1996-1C Certificates shall be substantially in the form attached hereto as Exhibit A. Each purchaser of Series 1996-1C Certificates will be deemed to represent that either (A) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of a Series 1996-1C Trust Supplement 3 3 plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), have not been used to purchase Series 1996-1C Certificates or (B) the purchase and holding of Series 1996-1C Certificates is exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to Prohibited Transaction Class Exemption 95-60 (promulgated under ERISA and the Code). (ii) The Series 1996-1C Certificates shall be Book-Entry Certificates. (f) The Scheduled Payments of principal shall be as set forth in Exhibit B. (g) The proceeds of the Series 1996-1C Certificates shall be used to purchase the Series C Equipment Notes in the principal amount specified below:
Equipment Note Principal Amount Maturity -------------- ---------------- -------- N624AW-C $ 4,476,247 January 2, 2002 N626AW-C 4,476,247 January 2, 2002 N631AW-C 4,476,247 January 2, 2002 N633AW-C 4,532,787 July 2, 2004 N634AW-C 4,552,621 January 2, 2002 N635AW-C 4,552,621 January 2, 2002 N636AW-C 4,552,621 January 2, 2002 N637AW-C 4,552,621 January 2, 2002 V0025-C 524,996 January 2, 2004 V0049-C 524,996 January 2, 2004 V0019-C 524,996 January 2, 2004
(h) Each Owner Trustee, acting on behalf of its respective Owner Participant, will issue on a non-recourse basis, the Equipment Notes, the proceeds of which shall be used, among other things, to refinance the outstanding debt portion of the purchase price to such Owner Trustee of the following Equipment: Series 1996-1C Trust Supplement 4 4
U.S. Registration Number/Manufacturer's Equipment Serial Number --------- ------------- Airbus A320-231 N624AW/55 Airbus A320-231 N626AW/65 Airbus A320-231 N631AW/77 Airbus A320-231 N633AW/82 Airbus A320-231 N634AW/091 Airbus A320-231 N635AW/092 Airbus A320-231 N636AW/098 Airbus A320-231 N637AW/099 IAE V2500 NA/V0025 IAE V2500 NA/V0049 IAE V2500 NA/V0019
(i) The related Note Documents are listed on Exhibit C. (j) (i) The Trustee and the Other Trustees are parties to the Intercreditor Agreement which sets forth certain terms of subordination and other matters. The Series 1996-1C are junior in right of payment to the America West Airlines Pass Through Certificates, Series 1996-1A and the America West Airlines Pass Through Certificates, Series 1996-1B and senior in right of payment to the America West Airlines Pass Through Certificates, Series 1996-1D and the America West Airlines Pass Through Certificates, Series 1996-1E. (ii) The holders of Series 1996-1C Certificates may purchase America West Airlines Pass Through Certificates, Series 1996-1A and America West Airlines Pass Through Certificates, Series 1996-1B and the Series 1996-1C Certificates may be purchased by the holders of certain series of Certificates with a lower seniority as provided in Article III hereof and as further set forth in Section 6.01(b) of the Basic Agreement. (k) Notice of the termination of the Series 1996-1C Trust shall be mailed promptly by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution. Series 1996-1C Trust Supplement 5 5 ARTICLE II DEFINITIONS Section 2.01. Definitions. For all purposes of the Basic Agreement as supplemented by this Trust Supplement, the following capitalized term has the following meaning: Intercreditor Agreement: Means the Intercreditor Agreement dated as of the date hereof among the Trustee, the Other Trustees, the Liquidity Providers named therein and Fleet National Bank, as Subordination Agent, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Liquidity Facility: Means, initially, the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between Fleet National Bank, as Subordination Agent, as agent and trustee for the 1996-1C Trust, and Kredietbank N.V., acting through its New York branch, and, from and after the replacement of such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms. Other Agreements: Means (i) the Basic Agreement as supplemented by Trust Supplement No. 1996-1A dated the date hereof relating to America West Airlines 1996-1A Pass Through Trust, (ii) the Basic Agreement as supplemented by Trust Supplement No. 1996-1B dated the date hereof relating to America West Airlines 1996-1B Pass Through Trust, (iii) the Basic Agreement as supplemented by Trust Supplement No.1996-1D dated the date hereof relating to America West Airlines 1996-1D Pass Through Trust and (iv) the Basic Agreement as supplemented by Trust Supplement No. 1996-1E dated the date hereof relating to America West Airlines 1996-1E Pass Through Trust. Other Trustees: Means the trustee under the Other Agreements, and any successor or other trustee appointed as provided therein. Plan Transferee: Means any Plan or other entity that is using the assets of any Plan to purchase or hold its interest in a Series 1996-1C Certificate. For purposes of this definition, a "Plan" means any employee benefit plan subject to ERISA as well as any plan that is not subject to ERISA but which is subject to Section 4975 of the Internal Revenue Code of 1986, as amended. PTC Event of Default: Means the failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance of the Series 1996-1C Certificates on the Final Legal Series 1996-1C Trust Supplement 6 6 Distribution Date for such Certificates or (ii) interest due on such Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the holders of the Certificates entitled thereto). Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture), including Overdue Scheduled Payments (as defined in the Intercreditor Agreement), payments in respect of the redemption or repurchase of any Equipment Note and payments in respect of the sale, of any Equipment Note to the related Owner Trustee, Owner Participant or any other Person. Trust Property: Means (i) the Equipment Notes held as the property of the Trust and all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account, and (iii) all rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement and the Liquidity Facility, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Trustee on behalf of the Trust pursuant to the Intercreditor Agreement or the Liquidity Facility. Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc. ARTICLE III PURCHASE RIGHTS OF CERTIFICATEHOLDERS Section 3.01. (i) At any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to the Class B Trust Agreement) to purchase all, but not less than all, of the Class A Certificates and the Class B Certificates upon ten days' written notice to the Class A Trustee, the Class B Trustee and each other Certificateholder, provided that (A) if prior to the end of such ten day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Series 1996-1C Trust Supplement 7 7 Class A Certificates and the Class B Certificates pro rata based on the outstanding principal amount of the Certificates held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates and Class B Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement. (ii) By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, (1) each Class D Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to the Class B Trust Agreement or the purchase of the Class A Certificates and the Class B Certificates pursuant to paragraph (i) above) to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates and the Series 1996-1C Certificates upon ten days' written notice to the Class A Trustee, the Class B Trustee, the Trustee and each other Class D Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class D Certificateholder notifies such purchasing Class D Certificateholder that such other Class D Certificateholder wants to participate in such purchase, then such other Class D Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates and the Series 1996-1C Certificates pro rata based on the Fractional Undivided Interest in the Class D Trust held by each such Class D Certificateholder and (B) if prior to the end of such ten day period any other Class D Certificateholder fails to notify the purchasing Class D Certificateholder of such other Class D Certificateholder's desire to participate in such a purchase, then such other Class D Certificateholder shall lose its right to purchase the Class A Certificates, the Class B Certificates, and the Series 1996-1C Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement; and (2) each Class E Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to the Class B Trust Agreement, the purchase of the Class A Certificates and the Class B Certificates pursuant to paragraph (i) above or the purchase of the Class A Certificates, the Class B Certificates and the Class C Certificates pursuant to clause (ii)(1) above) to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates, Series 1996-1C Trust Supplement 8 8 the Series 1996-1C Certificates and the Class D Certificates upon ten days' written notice to the Class A Trustee, the Class B Trustee, the Trustee, the Class D Trustee and each other Class E Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class E Certificateholder notifies such purchasing Class E Certificateholder that such other Class E Certificateholder wants to participate in such purchase, then such other Class E Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates, the Series 1996-1C Certificates and the Class D Certificates pro rata based on the Fractional Undivided Interest in the Class E Trust held by each such Class E Certificateholder and (B) if prior to the end of such ten day period any other Class E Certificateholder fails to notify the purchasing Class E Certificateholder of such other Class E Certificateholder's desire to participate in such a purchase, then such other Class E Certificateholder shall lose its right to purchase the Class A Certificates, the Class B Certificates, the Series 1996-1C Certificates and the Class D Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement. As used in this Article III, the terms "Class A Certificate", "Class A Trustee", ""Class B Certificate", "Class B Trust Agreement", "Class B Trustee", "Class D Certificate", "Class D Certificateholder", "Class D Trust", "Class D Trustee", "Class E Certificateholder" and "Class E Trust" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. ARTICLE IV THE TRUSTEE Section 4.01. The Trustee. The Trustee is hereby directed to execute and deliver the Intercreditor Agreement on or prior to the Issuance Date in the form delivered to the Trustee by the Company. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Trust Supplement or the due execution hereof by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed by the Trustee by reason of this Trust Supplement other than as set forth in the Basic Agreement, and this Trust Supplement is executed and accepted on behalf of the Series 1996-1C Trust Supplement 9 9 Trustee, subject to all the terms and conditions set forth in the Basic Agreement, upon the effectiveness thereof, as fully to all intents as if the same were herein set forth at length. The Trustee represents and warrants that the Intercreditor Agreement will be duly executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01. Basic Agreement Ratified. Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument. Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES 1996-1C CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 5.03. Execution in Counterparts. This Trust Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. Series 1996-1C Trust Supplement 10 10 IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized, as of the day and year first written above. AMERICA WEST AIRLINES, INC. By:___________________________ Name:_________________________ Title:________________________ FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Series 1996-1C Trust Supplement 11 EXHIBIT A FORM OF CERTIFICATE [Include on each Certificate that is a Global Certificate: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1) BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1C Pass Through Certificate, Series 1996-1C Issuance Date: November 26, 1996 Final Legal Distribution Date: January 2, 2006 Evidencing A Fractional Undivided Interest In the 1996-1C Trust, The Property Of Which Includes Certain Equipment Notes Each Secured By An Aircraft or Spare Engine Leased To America West Airlines, Inc. Certificate No.__________ $_____________ Fractional Undivided Interest representing 0._ % of the Trust per $1,000 of Reference Principal Amount CUSIP No. 023654-AC0 THIS CERTIFIES THAT _________________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of $ ____________________(the "Reference Principal Amount") in the America West Airlines 1996-1C Pass Through Trust 1996-1C (the "Trust") created by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of November 26, 1996 (the "Basic - -------- (1) Not necessarily applicable in respect of one Certificate in definitive form. 12 2 Agreement"), between the Trustee and America West Airlines, Inc., a Delaware corporation (the "Company"), as supplemented by Trust Supplement No. 1996-1C thereto, dated as of November 26, 1996 (collectively, the "Agreement"), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "America West Airlines Pass Through Certificates, Series 1996-1C" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in the Equipment leased to the Company. Each of the Certificates represents a Fractional Undivided Interest in the Trust and the Trust Property and has no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other America West Airlines Pass Through Certificates, Series 1996-1C, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other America West Airlines Pass Through Certificates, Series 1996-1C and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 2 and July 2 (a "Regular Distribution Date") commencing January 2, 1997 to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate Series 1996-1C Trust Supplement 13 3 is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent an obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth herein and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the entire Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company Series 1996-1C Trust Supplement 14 4 and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 Fractional Undivided Interests and integral multiples thereof, provided, that one Certificate may be in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be Series 1996-1C Trust Supplement 15 5 distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1C By: FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Dated: _______________ Series 1996-1C Trust Supplement 16 [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Series 1996-1C Trust Supplement 17 EXHIBIT B REGULAR DISTRIBUTION DATES AND SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment - ------------------------- ----------------- January 2, 1997 $ 0 July 2, 1997 754,954 January 2, 1998 0 July 2, 1998 754,957 January 2, 1999 0 July 2, 1999 1,650,545 January 2, 2000 4,311,287 July 2, 2000 7,926,045 January 2, 2001 9,248,501 July 2, 2001 7,342,101 January 2, 2002 3,530,080 July 2, 2002 23,766 January 2, 2003 657,567 July 2, 2003 630,129 January 2, 2004 98,301 July 2, 2004 818,767
Series 1996-1C Trust Supplement 18 EXHIBIT C Related Note Documents Series 1996-1C Trust Supplement EX-4.5 6 FORM OF TRUST SUPPLEMENT NO. 1996-1D 1 EXHIBIT 4.5 This Trust Supplement No. 1996-1D, dated as of November 26, 1996 (herein called the "Trust Supplement"), between America West Airlines, Inc., a Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"), to the Pass Through Trust Agreement, dated as of November 26, 1996, between the Company and the Trustee (the "Basic Agreement"). W I T N E S S E T H: WHEREAS, the Basic Agreement, unlimited as to the aggregate principal amount of Certificates (unless otherwise specified herein, capitalized terms used herein without definition having the respective meanings specified heretofore in the Basic Agreement) which may be issued thereunder, has heretofore been executed and delivered: WHEREAS, each Owner Trustee, acting on behalf of its respective Owner Participant, will issue, on a non-recourse basis, Equipment Notes, among other things, to refinance the outstanding debt portion of the purchase price of the aircraft and spare engines purchased by such Owner Trustee and leased to the Company pursuant to the related Lease; WHEREAS, pursuant to the terms and conditions of the Basic Agreement as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall purchase such Equipment Notes issued by each Owner Trustee having the same interest rate as, and final maturity dates not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Notes in trust for the benefit of the Certificateholders; WHEREAS, the Trustee hereby declares the creation of the America West Airlines Pass Through Trust 1996-1D (the "1996-1D Trust") for the benefit of the Certificateholders, and the initial Certificateholders as the grantors of the 1996-1D Trust, by their respective acceptances of the Certificates, join in the creation of this 1996-1D Trust with the Trustee; WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized; WHEREAS, this Trust Supplement is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by such provisions; NOW THEREFORE, in consideration of the premises herein, it is agreed between the Company and the Trustee as follows: Series 1996-1D Trust Supplement 2 2 ARTICLE I THE CERTIFICATES Section 1.01. The Certificates. There is hereby created a series of Certificates to be issued under the Agreement to be distinguished and known as "America West Airlines Pass Through Certificates, Series 1996-1D" (hereinafter defined as the "Series 1996-1D Certificates"). Each Series 1996-1D Certificate represents a Fractional Undivided Interest in the 1996-1D Trust created hereby. The terms and conditions applicable to the Series 1996-1D Certificates are as follows: (a) The aggregate principal amount of the Series 1996-1D Certificates that shall be authenticated under the Agreement (which limit shall not pertain to Series 1996-1D Certificates authenticated and delivered upon registration of transfer for, or in lieu of, other Series 1996-1D Certificates pursuant to Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial issuance is $29,618,000. The parties hereto acknowledge that the provisions of Section 2.02(b) of the Basic Agreement are of no force or effect with respect to the Series 1996-1D Certificates. (b) The Regular Distribution Dates with respect to any payment of Scheduled Payments means each January 2 and July 2 commencing January 2, 1997, until payment of all of the Scheduled Payments to be made under the Equipment Notes has been made. (c) The Final Legal Distribution Date is July 2, 2002. (d) The Special Distribution Date with respect to a Special Payment shall be the date specified as such in the notice the Trustee must give with respect to such Special Payment pursuant to Section 4.02(c) of the Basic Agreement, which date shall be the date specified as the Special Distribution Date (as defined in the Intercreditor Agreement) with respect to the related Special Payment (as defined in the Intercreditor Agreement) in the applicable written notice given to the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement. (e) (i) The Series 1996-1D Certificates shall be substantially in the form attached hereto as Exhibit A. Each purchaser of Series 1996-1D Certificates will be deemed to represent that either (A) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of a Series 1996-1D Trust Supplement 3 3 plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), have not been used to purchase Series 1996-1D Certificates or (B) the purchase and holding of Series 1996-1D Certificates is exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to Prohibited Transaction Class Exemption 95-60 (promulgated under ERISA and the Code). (ii) The Series 1996-1D Certificates shall be Book-Entry Certificates. (f) The Scheduled Payments of principal shall be as set forth in Exhibit B. (g) The proceeds of the Series 1996-1D Certificates shall be used to purchase the Series D Equipment Notes in the principal amount specified below:
Equipment Note Principal Amount Maturity -------------- ---------------- -------- N624AW-D $ 2,288,832 January 2, 1998 N626AW-D 3,575,831 July 2, 1998 N631AW-D 3,575,831 July 2, 1998 N633AW-D 1,711,069 January 2, 1998 N634AW-D 4,249,113 January 2, 2002 N635AW-D 4,249,113 January 2, 2002 N636AW-D 4,249,113 January 2, 2002 N637AW-D 4,249,113 January 2, 2002 V0025-D 489,995 July 2, 2002 V0049-D 489,995 July 2, 2002 V0019-D 489,995 July 2, 2002
(h) Each Owner Trustee, acting on behalf of its respective Owner Participant, will issue on a non-recourse basis, the Equipment Notes, the proceeds of which shall be used, among other things, to refinance the outstanding debt portion of the purchase price to such Owner Trustee of the following Equipment: Series 1996-1D Trust Supplement 4 4
U.S. Registration Number/Manufacturer's Equipment Serial Number --------- ------------- Airbus A320-231 N624AW/55 Airbus A320-231 N626AW/65 Airbus A320-231 N631AW/77 Airbus A320-231 N633AW/82 Airbus A320-231 N634AW/091 Airbus A320-231 N635AW/092 Airbus A320-231 N636AW/098 Airbus A320-231 N637AW/099 IAE V2500 NA/V0025 IAE V2500 NA/V0049 IAE V2500 NA/V0019
(i) The related Note Documents are listed on Exhibit C. (j) (i) The Trustee and the Other Trustees are parties to the Intercreditor Agreement which sets forth certain terms of subordination and other matters. The Series 1996-1D are junior in right of payment to the America West Airlines Pass Through Certificates, Series 1996-1A, the America West Airlines Pass Through Certificates, Series 1996-1B and the America West Pass Through Certificates, Series 1996-1C and senior in right of payment to the America West Airlines Pass Through Certificates, Series 1996-1E. (ii) The holders of Series 1996-1D Certificates may purchase America West Airlines Pass Through Certificates, Series 1996-1A, America West Airlines Pass Through Certificates, Series 1996-1B and America West Pass Through Certificates, Series 1996-1C and the Series 1996-1D Certificates may be purchased by the holders of America West Pass Through Certificates, Series 1996-1E as provided in Article III hereof and as further set forth in Section 6.01(b) of the Basic Agreement. (k) Notice of the termination of the Series 1996-1D Trust shall be mailed promptly by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution. Series 1996-1D Trust Supplement 5 5 ARTICLE II DEFINITIONS Section 2.01. Definitions. For all purposes of the Basic Agreement as supplemented by this Trust Supplement, the following capitalized term has the following meaning: Intercreditor Agreement: Means the Intercreditor Agreement dated as of the date hereof among the Trustee, the Other Trustees, the Liquidity Providers named therein and Fleet National Bank, as Subordination Agent, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Other Agreements: Means (i) the Basic Agreement as supplemented by Trust Supplement No. 1996-1A dated the date hereof relating to America West Airlines 1996-1A Pass Through Trust, (ii) the Basic Agreement as supplemented by Trust Supplement No. 1996-1B dated the date hereof relating to America West Airlines 1996-1B Pass Through Trust, (iii) the Basic Agreement as supplemented by Trust Supplement No.1996-1C dated the date hereof relating to America West Airlines 1996-1C Pass Through Trust and (iv) the Basic Agreement as supplemented by Trust Supplement No. 1996-1E dated the date hereof relating to America West Airlines 1996-1E Pass Through Trust. Other Trustees: Means the trustee under the Other Agreements, and any successor or other trustee appointed as provided therein. Plan Transferee: Means any Plan or other entity that is using the assets of any Plan to purchase or hold its interest in a Series 1996-1D Certificate. For purposes of this definition, a "Plan" means any employee benefit plan subject to ERISA as well as any plan that is not subject to ERISA but which is subject to Section 4975 of the Internal Revenue Code of 1986, as amended. PTC Event of Default: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance ont the Final Legal Distribution Date for such series specified in the related Trust Supplement or (ii) interest due on such Certificates on any Distribution Date. Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture), including Overdue Scheduled Payments (as defined in the Intercreditor Agreement), payments in respect of the redemption or repurchase of any Equipment Note and payments in respect of the sale, of any Series 1996-1D Trust Supplement 6 6 Equipment Note to the related Owner Trustee, Owner Participant or any other Person. Trust Property: Means (i) the Equipment Notes held as the property of the Trust and all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account, and (iii) all rights of the Trust and the Trustee, on behalf of the Trust and under the Intercreditor Agreement, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Trustee on behalf of the Trust pursuant to the Intercreditor Agreement. Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc. ARTICLE III PURCHASE RIGHTS OF CERTIFICATEHOLDERS Section 3.01. (i) At any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to the Class B Trust Agreement or the purchase of the Class A Certificates and the Class B Certificates pursuant to the Class C Trust Agreement) to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates and the Class C Certificates upon ten days' written notice to the Class A Trustee, the Class B Trustee, the Class C Trustee and each other Certificateholder, provided that (A) if prior to the end of such ten day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates and the Class C Certificates pro rata based on the outstanding principal amount of the Certificates held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates, Class B Certificates and the Class C Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement. (ii) By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence Series 1996-1D Trust Supplement 7 7 and during the continuation of a Triggering Event, each Class E Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to the Class B Trust Agreement, the purchase of the Class A Certificates and the Class B Certificates pursuant to the Class C Trust Agreement or the purchase of the Class A Certificates, the Class B Certificates and the Class C Certificates pursuant to paragraph (i) above) to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates, the Class C Certificates and the Series 1996-1D Certificates upon ten days' written notice to the Class A Trustee, the Class B Trustee, the Class C Trustee, the Trustee and each other Class E Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class E Certificateholder notifies such purchasing Class E Certificateholder that such other Class E Certificateholder wants to participate in such purchase, then such other Class E Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates, the Class C Certificates and the Series 1996-1D Certificates pro rata based on the Fractional Undivided Interest in the Class E Trust held by each such Class E Certificateholder and (B) if prior to the end of such ten day period any other Class E Certificateholder fails to notify the purchasing Class E Certificateholder of such other Class E Certificateholder's desire to participate in such a purchase, then such other Class E Certificateholder shall lose its right to purchase the Class A Certificates, the Class B Certificates, the Class C Certificates and the Series 1996-1D Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement. As used in this Article III, the terms "Class A Certificate", "Class A Trustee", ""Class B Certificate", "Class B Trust Agreement", "Class B Trustee", "Class C Certificate", "Class C Trust Agreement", "Class C Trustee", "Class E Certificateholder", and "Class E Trust" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. ARTICLE IV THE TRUSTEE Section 4.01. The Trustee. The Trustee is hereby directed to execute and deliver the Intercreditor Agreement on or prior to the Issuance Date in the form delivered to the Trustee by the Company. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Trust Supplement or the due execution hereof by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Series 1996-1D Trust Supplement 8 8 Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed by the Trustee by reason of this Trust Supplement other than as set forth in the Basic Agreement, and this Trust Supplement is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Basic Agreement, upon the effectiveness thereof, as fully to all intents as if the same were herein set forth at length. The Trustee represents and warrants that the Intercreditor Agreement will be duly executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01. Basic Agreement Ratified. Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument. Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES 1996-1D CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 5.03. Execution in Counterparts. This Trust Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. Series 1996-1D Trust Supplement 9 9 IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized, as of the day and year first written above. AMERICA WEST AIRLINES, INC. By:___________________________ Name:_________________________ Title:________________________ FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Series 1996-1D Trust Supplement 10 EXHIBIT A FORM OF CERTIFICATE [Include on each Certificate that is a Global Certificate: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN].(1) BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1D Pass Through Certificate, Series 1996-1D Issuance Date: November 26, 1996 Final Legal Distribution Date: July 2, 2002 Evidencing A Fractional Undivided Interest In the 1996-1D Trust, The Property Of Which Includes Certain Equipment Notes Each Secured By An Aircraft or Spare Engine Leased To America West Airlines, Inc. Certificate No.__________ $_____________ Fractional Undivided Interest representing 0._ % of the Trust per $1,000 of Reference Principal Amount CUSIP No. 023654-AD8 THIS CERTIFIES THAT _________________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of $ ____________________(the "Reference Principal Amount") in the America West Airlines Pass Through Trust 1996-1D (the "Trust") created by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of November 26, 1996 (the "Basic Agreement"), - ---------- (1) Not necessarily applicable in respect of one Certificate in definitive form. 11 2 between the Trustee and America West Airlines, Inc., a Delaware corporation (the "Company"), as supplemented by Trust Supplement No. 1996-1D thereto, dated as of November 26, 1996 (collectively, the "Agreement"), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "America West Airlines Pass Through Certificates, Series 1996-1D" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive payments under the Intercreditor Agreement (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in the Equipment leased to the Company. Each of the Certificates represents a Fractional Undivided Interest in the Trust and the Trust Property and has no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other America West Airlines Pass Through Certificates, Series 1996-1D, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other America West Airlines Pass Through Certificates, Series 1996-1D and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 2 and July 2 (a "Regular Distribution Date") commencing January 2, 1997 to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding Series 1996-1D Trust Supplement 12 3 the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent an obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth herein and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the entire Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders Series 1996-1D Trust Supplement 13 4 holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 Fractional Undivided Interests and integral multiples thereof, provided, that one Certificate may be in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. Series 1996-1D Trust Supplement 14 5 THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1D By: FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Dated: _______________ Series 1996-1D Trust Supplement 15 [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Series 1996-1D Trust Supplement 16 EXHIBIT B REGULAR DISTRIBUTION DATES AND SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment - ------------------------- ----------------- January 2, 1997 $ 4,891,774 July 2, 1997 2,533,536 January 2, 1998 5,056,624 July 2, 1998 3,995,139 January 2, 1999 4,627,316 July 2, 1999 3,145,864 January 2, 2000 3,076,780 July 2, 2000 29,397 January 2, 2001 0 July 2, 2001 141,585 January 2, 2002 1,566,800 July 2, 2002 553,185
Series 1996-1D Trust Supplement 17 EXHIBIT C Related Note Documents Series 1996-1D Trust Supplement EX-4.6 7 FORM OF TRUST SUPPLEMENT NO. 1996-1E 1 EXHIBIT 4.6 This Trust Supplement No. 1996-1E, dated as of November 26, 1996 (herein called the "Trust Supplement"), between America West Airlines, Inc., a Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"), to the Pass Through Trust Agreement, dated as of November 26, 1996, between the Company and the Trustee (the "Basic Agreement"). W I T N E S S E T H: WHEREAS, the Basic Agreement, unlimited as to the aggregate principal amount of Certificates (unless otherwise specified herein, capitalized terms used herein without definition having the respective meanings specified heretofore in the Basic Agreement) which may be issued thereunder, has heretofore been executed and delivered: WHEREAS, each Owner Trustee, acting on behalf of its respective Owner Participant, will issue, on a non-recourse basis, Equipment Notes, among other things, to refinance the outstanding debt portion of the purchase price of the aircraft and spare engines purchased by such Owner Trustee and leased to the Company pursuant to the related Lease; WHEREAS, pursuant to the terms and conditions of the Basic Agreement as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall purchase such Equipment Notes issued by each Owner Trustee having the same interest rate as, and final maturity dates not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Notes in trust for the benefit of the Certificateholders; WHEREAS, the Trustee hereby declares the creation of the America West Airlines Pass Through Trust, Series 1996-1E (the "1996-1E Trust") for the benefit of the Certificateholders, and the initial Certificateholders as the grantors of the 1996-1E Trust, by their respective acceptances of the Certificates, join in the creation of this 1996-1E Trust with the Trustee; WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized; WHEREAS, this Trust Supplement is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by such provisions; Series 1996-1E Trust Supplement 2 2 NOW THEREFORE, in consideration of the premises herein, it is agreed between the Company and the Trustee as follows: ARTICLE I THE CERTIFICATES Section 1.01. The Certificates. There is hereby created a series of Certificates to be issued under the Agreement to be distinguished and known as "America West Airlines Pass Through Certificates, Series 1996-1E" (hereinafter defined as the "Series 1996-1E Certificates"). Each Series 1996-1E Certificate represents a Fractional Undivided Interest in the 1996-1E Trust created hereby. The terms and conditions applicable to the Series 1996-1E Certificate are as follows: (a) The aggregate principal amount of the Series 1996-1E Certificates that shall be authenticated under the Agreement (which limit shall not pertain to Series 1996-1E Certificates authenticated and delivered upon registration of transfer for, or in lieu of, other Series 1996-1E Certificates pursuant to Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial issuance is $14,541,000. (b) The Regular Distribution Dates with respect to any payment of Scheduled Payments means each January 2 and July 2 commencing January 2, 1997, until payment of all of the Scheduled Payments to be made under the Equipment Notes has been made. (c) The Final Legal Distribution Date is January 2, 2004. (d) The Special Distribution Date with respect to a Special Payment shall be the date specified as such in the notice the Trustee must give with respect to such Special Payment pursuant to Section 4.02(c) of the Basic Agreement, which date shall be the date specified as the Special Distribution Date (as defined in the Intercreditor Agreement) with respect to the related Special Payment (as defined in the Intercreditor Agreement) in the applicable written notice given to the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement. (e) (i) The Series 1996-1E Certificates shall be substantially in the form attached hereto as Exhibit A. Each purchaser of Series 1996-1E Certificates will be deemed to represent that either (A) the assets of an employee benefit plan subject to Title I of the Employee Retirement Series 1996-1E Trust Supplement 3 3 Income Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), have not been used to purchase Series 1996-1E Certificates or (B) the purchase and holding of Series 1996-1E Certificates is exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to Prohibited Transaction Class Exemption 95-60 (promulgated under ERISA and the Code). (ii) The Series 1996-1E Certificates shall be Book- Entry Certificates. (f) The Scheduled Payments of principal shall be as set forth in Exhibit B. (g) A portion of the proceeds of the Series 1996-1E Certificates shall be used to purchase the Series E Equipment Notes in the principal amount specified below:
Equipment Note Principal Amount Maturity -------------- ---------------- -------- N634AW-E $ 2,541,597 July 2, 2002 N635AW-E $ 2,541,597 July 2, 2002 N636AW-E $ 2,541,597 July 2, 2002 N637AW-E $ 2,541,597 July 2, 2002 V0025-E 1,458,204 January 2, 2004 V0049-E 1,458,204 January 2, 2004 V0019-E 1,458,204 January 2, 2004
(h) Each Owner Trustee, acting on behalf of its respective Owner Participant, will issue on a non-recourse basis, the Equipment Notes, the proceeds of which shall be used, among other things, to refinance the outstanding debt portion of the purchase price to such Owner Trustee of the following Equipment:
U.S. Registration Number/Manufacturer's Equipment Serial Number --------- ------------- Airbus A320-231 N634AW/091 Airbus A320-231 N635AW/092 Airbus A320-231 N636AW/098 Airbus A320-231 N637AW/099 IAE V2500 NA/V0025 IAE V2500 NA/V0049 IAE V2500 NA/V0019
Series 1996-1E Trust Supplement 4 4 (i) The related Note Documents are listed on Exhibit C. (j) (i) The Trustee and the Other Trustees are parties to the Intercreditor Agreement which sets forth certain terms of subordination and other matters. The Series 1996-1E are junior in right of payment to the America West Airlines Pass Through Certificates, Series 1996-1A, the America West Airlines Pass Through Certificates, Series 1996-1B, the America West Pass Through Certificates, Series 1996-1C and the America West Airlines Pass Through Certificates, Series 1996-1D. (ii) The holders of Series 1996-1E Certificates may purchase America West Airlines Pass Through Certificates, Series 1996-1A, America West Airlines Pass Through Certificates, Series 1996-1B, America West Pass Through Certificates, Series 1996-1C and the America West Airlines Pass Through Certificates, Series 1996-1D. as provided in Article III hereof and as further set forth in Section 6.01(b) of the Basic Agreement. (k) Notice of the termination of the Series 1996-1E Trust shall be mailed promptly by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution. ARTICLE II DEFINITIONS Section 2.01. Definitions. For all purposes of the Basic Agreement as supplemented by this Trust Supplement, the following capitalized term has the following meaning: Intercreditor Agreement: Means the Intercreditor Agreement dated as of the date hereof among the Trustee, the Other Trustees, the Liquidity Providers named therein and Fleet National Bank, as Subordination Agent, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Other Agreements: Means (i) the Basic Agreement as supplemented by Trust Supplement No. 1996-1A dated the date hereof relating to America West Airlines 1996-1A Pass Through Trust, (ii) the Basic Agreement as supplemented by Trust Supplement No. 1996-1B dated the date hereof relating to America West Airlines 1996-1B Pass Through Trust, (iii) the Basic Agreement as supplemented by Trust Supplement No.1996-1C dated the date hereof relating to America West Airlines 1996-1C Pass Series 1996-1E Trust Supplement 5 5 Through Trust and (iv) the Basic Agreement as supplemented by Trust Supplement No. 1996-1D dated the date hereof relating to America West Airlines 1996-1D Pass Through Trust. Other Trustees: Means the trustee under the Other Agreements, and any successor or other trustee appointed as provided therein. Plan Transferee: Means any Plan or other entity that is using the assets of any Plan to purchase or hold its interest in a Series 1996-1E Certificate. For purposes of this definition, a "Plan" means any employee benefit plan subject to ERISA as well as any plan that is not subject to ERISA but which is subject to Section 4975 of the Internal Revenue Code of 1986, as amended. PTC Event of Default: Means any failure to pay within 10 Business Days of the due date hereof: (i) the outstanding Pool Balance on the Final Legal Distribution Date for such series specified in the related Trust Supplement or (ii) interest due on such Certificates on any Distribution Date. Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture), including Overdue Scheduled Payments (as defined in the Intercreditor Agreement), payments in respect of the redemption or repurchase of any Equipment Note and payments in respect of the sale, of any Equipment Note to the related Owner Trustee, Owner Participant or any other Person. Trust Property: Means (i) the Equipment Notes held as the property of the Trust and all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account, and (iii) all rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Trustee on behalf of the Trust pursuant to the Intercreditor Agreement. Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc. ARTICLE III PURCHASE RIGHTS OF CERTIFICATEHOLDERS Section 3.01. (i) At any time after the occurrence and during the continuation of a Triggering Event, each Series 1996-1E Trust Supplement 6 6 Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to the Class B Trust Agreement, the purchase of the Class A Certificates and the Class B Certificates pursuant to the Class C Trust Agreement or the purchase of the Class A Certificates, the Class B Certificates and the Class C Certificates pursuant to the Class D Trust Agreement) to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates, the Class C Certificates and the Class D Certificates upon ten days' written notice to the Class A Trustee, the Class B Trustee, the Class C Trustee, the Class D Trustee and each other Certificateholder, provided that (A) if prior to the end of such ten day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates, the Class B Certificates, the Class C Certificates and the Class D Certificates pro rata based on the outstanding principal amount of the Certificates held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates, the Class B Certificates, the Class C Certificates and the Class D Certificates pursuant to this Section and Section 6.01(b) of the Basic Agreement. As used in this Article III, the terms "Class A Certificate", "Class A Trustee", "Class B Certificate", "Class B Trust Agreement", "Class B Trustee", "Class C Certificate", "Class C Trust Agreement", "Class C Trustee", "Class D Certificate", "Class D Trust Agreement" and "Class D Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. ARTICLE IV THE TRUSTEE Section 4.01. The Trustee. The Trustee is hereby directed to execute and deliver the Intercreditor Agreement on or prior to the Issuance Date in the form delivered to the Trustee by the Company. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Trust Supplement or the due execution hereof by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Series 1996-1E Trust Supplement 7 7 Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed by the Trustee by reason of this Trust Supplement other than as set forth in the Basic Agreement, and this Trust Supplement is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Basic Agreement, upon the effectiveness thereof, as fully to all intents as if the same were herein set forth at length. The Trustee represents and warrants that the Intercreditor Agreement will be duly executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01. Basic Agreement Ratified. Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument. Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES 1996-1E CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 5.03. Execution in Counterparts. This Trust Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. Series 1996-1E Trust Supplement 8 8 IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized, as of the day and year first written above. AMERICA WEST AIRLINES, INC. By:___________________________ Name:_________________________ Title:________________________ FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Series 1996-1E Trust Supplement 9 EXHIBIT A FORM OF CERTIFICATE [Include on each Certificate that is a Global Certificate: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1) BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1E Pass Through Certificate, Series 1996-1E Issuance Date: November 26, 1996 Final Distribution Date: January 2, 2004 Evidencing A Fractional Undivided Interest In the 1996-1E Trust, The Property Of Which Includes Certain Equipment Notes Each Secured By An Aircraft or Spare Engine Leased To America West Airlines, Inc. Certificate No._________ $_____________ Fractional Undivided Interest representing 0._ % of the Trust per $1,000 of Reference Principal Amount CUSIP No. 023654-AE6 THIS CERTIFIES THAT _________________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of $ ____________________(the "Reference Principal Amount") in the America West Airlines Pass Through Trust 1996-1E (the "Trust") created by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of November 26, 1996 (the "Basic Agreement"), - ---------- (1) Not necessarily applicable in respect of one Certificate in definitive form. 10 2 between the Trustee and America West Airlines, Inc., a Delaware corporation (the "Company"), as supplemented by Trust Supplement No. 1996-1E thereto, dated as of November 26, 1996 (collectively, the "Agreement"), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "America West Airlines Pass Through Certificates, Series 1996-1E" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive payments under the Intercreditor Agreement (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in the Equipment leased to the Company. Each of the Certificates represents a Fractional Undivided Interest in the Trust and the Trust Property and has no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other America West Airlines Pass Through Certificates, Series 1996-1E, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other America West Airlines Pass Through Certificates, Series 1996-1E and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 2 and July 2 (a "Regular Distribution Date") commencing January 2, 1997 to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding Series 1996-1E Trust Supplement 11 3 the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent an obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth herein and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the entire Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders Series 1996-1E Trust Supplement 12 4 holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 Fractional Undivided Interests and integral multiples thereof, provided, that one Certificate may be in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. Series 1996-1E Trust Supplement 13 5 THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1E By: FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Dated: _______________ Series 1996-1E Trust Supplement 14 [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. FLEET NATIONAL BANK, as Trustee By:___________________________ Name:_________________________ Title:________________________ Series 1996-1E Trust Supplement 15 EXHIBIT B REGULAR DISTRIBUTION DATES AND SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment - ------------------------- ----------------- January 2, 1997 $ 883,389 July 2, 1997 3,716,529 January 2, 1998 2,725,405 July 2, 1998 412,962 January 2, 1999 497,820 July 2, 1999 347,556 January 2, 2000 548,451 July 2, 2000 400,845 January 2, 2001 604,539 July 2, 2001 347,691 January 2, 2002 3,042,940 July 2, 2002 766,984 January 2, 2003 62,238 July 2, 2003 0 January 2, 2004 183,651
Series 1996-1E Trust Supplement 16 EXHIBIT C Related Note Documents Series 1996-1E Trust Supplement EX-4.7 8 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS A 1 EXHIBIT 4.7 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS A CERTIFICATES Dated as of November 26, 1996 between FLEET NATIONAL BANK, as Subordination Agent, as agent and trustee for the America West Airlines Pass Through Trust 1996-1A, as Borrower and KREDIETBANK N.V., NEW YORK BRANCH, as Liquidity Provider Relating to America West Airlines Pass Through Trust 1996-1A 6.85% America West Airlines Pass Through Certificates, Series 1996-1A 2 TABLE OF CONTENTS
Page ---- ARTICLE I........................................... 1 DEFINITIONS.......................................... 1 Section 1.1 Certain Defined Terms......................................... 1 ARTICLE II.......................................... 5 AMOUNT AND TERMS OF THE COMMITMENT............................... 5 Section 2.1 The Advances.................................................. 5 Section 2.2 Making the Advances........................................... 6 Section 2.3 Fees.......................................................... 7 Section 2.4 Reduction or Termination of the Commitment............................................................ 8 Section 2.5 Repayments of Interest Advances or the Final Advance......................................................... 8 Section 2.6 Repayments of Downgrade Advances.............................. 8 Section 2.7 Payments to the Liquidity Provider Under the Intercreditor Agreement........................................... 9 Section 2.8 Book Entries.................................................. 9 Section 2.9 Payments from Available Funds Only............................ 9 ARTICLE III OBLIGATIONS OF THE BORROWER.................................. 10 Section 3.1 Increased Costs............................................... 10 Section 3.2 Capital Adequacy.............................................. 11 Section 3.3 Payments Free of Deductions................................... 11 Section 3.4 Payments...................................................... 12 Section 3.5 Computations.................................................. 13 Section 3.6 Payment on Non-Business Days.................................. 13 Section 3.7 Interest...................................................... 13 Section 3.8 Replacement of Borrower....................................... 14 Section 3.9 Funding Loss Indemnification.................................. 14 Section 3.10 Illegality................................................... 15 ARTICLE IV CONDITIONS PRECEDENT...................................... 15 Section 4.1 Conditions Precedent to Effectiveness of Section 2.1........................................................... 15 Section 4.2 Conditions Precedent to Borrowing............................. 17 ARTICLE V COVENANTS........................................... 18 Section 5.1 Affirmative Covenants of the Borrower......................... 18 Section 5.2 Negative Covenants of the Borrower............................ 18
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Page ---- ARTICLE VI FINAL ADVANCE ............................................................................ 19 Section 6.1 Final Advance........................................... 19 ARTICLE VII MISCELLANEOUS ............................................................................ 19 Section 7.1 Amendments, Etc......................................... 19 Section 7.2 Notices, Etc............................................ 19 Section 7.3 No Waiver; Remedies..................................... 20 Section 7.4 Further Assurances...................................... 20 Section 7.5 Indemnification; Survival of Certain Provisions...................................................... 20 Section 7.6 Liability of the Liquidity Provider..................... 21 Section 7.7 Costs, Expenses and Taxes............................... 21 Section 7.8 Binding Effect; Participations.......................... 22 Section 7.9 Severability............................................ 24 Section 7.10 GOVERNING LAW.......................................... 24 Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial...................................................... 24 Section 7.12 Execution in Counterparts.............................. 25 Section 7.13 Entirety............................................... 25 Section 7.14 Headings; Section References........................... 25 Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........................................................ 25 Annex I - Interest Advance Notice of Borrowing Annex II - Downgrade Advance Notice of Borrowing Annex III - Notice of Replacement Borrower Annex IV - Notice of Automatic Reduction of Commitment
11 4 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS A CERTIFICATES IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS A CERTIFICATES dated as of November 26, 1996 between FLEET NATIONAL BANK, a national banking association, not in its individual capacity but solely as Subordination Agent under the Intercreditor Agreement (each as defined below), as agent and trustee for the Class A Trust (as defined below) (the "Borrower"), and KREDIETBANK N.V., acting through its New York Branch (the "Liquidity Provider"). W I T N E S S E T H WHEREAS, pursuant to the Class A Trust Agreement (such term and all other capitalized terms used in these recitals having the meanings set forth or referred to in Section 1.1), the Class A Trust is issuing the Class A Certificates; and WHEREAS, the Borrower, in order to support the timely payment of a portion of the interest on the Class A Certificates in accordance with their terms, has requested the Liquidity Provider to enter into this Agreement, providing in part for the Borrower to request in specified circumstances that advances be made hereunder. NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1 Certain Defined Terms. (a) Definitions. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise, the following capitalized terms shall have the following respective meanings for all purposes of this Agreement: "Advance" means an Interest Advance, a Final Advance or a Downgrade Advance, as the case may be. "Applicable Liquidity Rate" means the rates of interest specified in Section 3.7 with respect to any Advance. "Applicable Margin" means (x) with respect to any Downgrade Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per annum and (y) with respect to any other Advance including an Applied Downgrade Advance 1.5% (150 basis points) per annum. "Applied Downgrade Advance" means any amount in respect of a Downgrade Advance withdrawn from the Class A Cash Collateral Account for the purpose of paying interest on the Class A Certi- 5 ficates in accordance with Section 3.6(f) of the Intercreditor Agreement. "Available Commitment" means, at any time of determination, an amount equal to (i) the Commitment at such time less (ii) subject to the proviso contained in the third sentence of Section 2.2(a), the aggregate amount of each Advance outstanding at such time; provided that following a Downgrade Advance or a Final Advance, the Available Commitment shall be zero. "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of (i) the base commercial lending rate announced from time to time by the Liquidity Provider, or (ii) the rate quoted by the Liquidity Provider, at approximately 11:00 A.M., New York City time, to dealers in the New York Federal funds market for overnight offering of dollars by the Liquidity Provider, for deposit plus .50 of 1 percent (.50%). "Base Rate Advance" means an Advance that bears interest at a rate based upon the Base Rate. "Borrower" has the meaning assigned to such term in the recital of parties to this Agreement. "Borrowing" means the making of Advances requested by delivery of a Notice of Borrowing or pursuant to Section 6.1. "Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in New York, New York or Hartford, Connecticut, and, if the applicable Business Day relates to any Advance or other amount bearing interest based on the LIBOR Rate, on which dealings are carried on in the London interbank market. "Commitment" means, initially, $10,225,885.50 as the same may be reduced from time to time in accordance with Section 2.4(a). "Downgrade Advance" means an Advance made pursuant to Section 2.2(b). "Effective Date" has the meaning specified in Section 4.1. The delivery of the certificate of the Liquidity Provider contemplated by Section 4.1(d) shall be conclusive evidence that the Effective Date has occurred. "Expenses" means liabilities, obligations, damages, settlements, penalties, claims, actions, suits, costs, expenses and disbursements (including, without limitation, reasonable fees and disbursements of legal counsel and costs of investigation), provided that Expenses shall not include any Taxes. 2 6 "Expiry Date" means January 17, 2011. "Final Advance" means an Advance made pursuant to Sections 2.2(c) and 6.1. "Intercreditor Agreement" means the Intercreditor Agreement dated the date hereof, among the Trustees, the Liquidity Provider, the liquidity provider under each Liquidity Facility (other than this Agreement) and the Subordination Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Interest Advance" means an Advance made pursuant to Section 2.2(a). "Interest Period" means, with respect to any LIBOR Advance, each of the following periods: (i) the period beginning on the date such LIBOR Advance is made (or is converted from a Base Rate Advance) and ending on the next Regular Distribution Date; and (ii) each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the next Regular Distribution Date. "Lending Office" means the lending office of the Liquidity Provider, presently located at 125 West 55th Street, New York, NY 10019, or such other lending office as the Liquidity Provider from time to time shall notify the Borrower at its lending office hereunder. "LIBOR Advance" means an Advance bearing interest at a rate based upon the LIBOR Rate. "LIBOR Rate" means, with respect to any Interest Period, the rate per annum at which deposits in U.S. Dollars are offered for the relevant Interest Period by the Liquidity Provider to prime banks in the London interbank market at approximately 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in the principal amount of the Advance to which such Interest Period is to apply and for a period of time comparable to such Interest Period, as quoted by the Liquidity Provider to the Subordination Agent. "Liquidity Event of Default" means the occurrence of the following: all of the Equipment Notes shall have been either declared to be immediately due and payable or shall not have been paid at their final maturity. A Liquidity Event of Default shall not occur upon an automatic acceleration of the Equipment Notes as a result of an America West Bankruptcy Event. 3 7 "Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) each affiliate of the Liquidity Provider, (iii) the respective directors, officers, employees, agents and servants of the Liquidity Provider and its affiliates, and (iv) the successors and permitted assigns of the persons described in clauses (i) through (iii), inclusive. "Liquidity Provider" has the meaning assigned to such term in the recital of parties to this Agreement. "Non-Excluded Tax" has the meaning specified in Section 3.3. "Notice of Borrowing" has the meaning specified in Section 2.2(d). "Notice of Replacement Borrower" has the meaning specified in Section 3.8. "Participant" has the meaning assigned to such term in Section 7.8(b). "Prospectus" means the prospectus included in the registration statement on Form S-3 (File No. 333-14691) filed by America West relating to certain pass through certificates, as such Prospectus may be amended or supplemented. "Related Indemnitee" means, with respect to any Liquidity Indemnitee, its director, officer, employee, agent, affiliate or employer. "Replenishment Amount" has the meaning assigned to such term in Section 2.6(b). "Required Amount" means, for any day, the sum of the aggregate amount of interest, calculated at the rate per annum equal to the Stated Interest Rate for the Class A Certificates, that would be payable on the Class A Certificates on each of the three successive semiannual Regular Distribution Dates immediately following such day or, if such day is a Regular Distribution Date, on such day and the succeeding two semiannual Regular Distribution Dates, in each case calculated on the basis of the Pool Balance of the Class A Certificates on such day and without regard to expected future payments of principal on the Class A Certificates. "Termination Date" means the earliest to occur of the following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to the Liquidity Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that all of the Class A Certificates have been paid in full (or provision has been made for such payment in accordance with the Intercreditor 4 8 Agreement and the Trust Agreements) or are otherwise no longer entitled to the benefits of this Agreement; (iii) the date on which the Borrower delivers to the Liquidity Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that a Replacement Liquidity Facility has been substituted for this Agreement in full pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date on which the Liquidity Provider makes the Final Advance; and (v) the date on which no Advance is or may (including by reason of reinstatement as herein provided) become available for a Borrowing hereunder. "Unpaid Advance" has the meaning assigned to such term in Section 2.5. (b) Terms Defined in the Intercreditor Agreement. For all purposes of this Agreement, the following terms shall have the respective meanings assigned to such terms in the Intercreditor Agreement: "America West", "America West Bankruptcy Event", "Certificates", "Class A Certificates", "Class A Certificateholders", "Class A Cash Collateral Account", "Class A Trust", "Class A Trust Agreement", "Class A Trustee", "Class B Certificates", "Class C Certificates", "Class D Certificates", "Class E Certificates", "Closing Date", "Controlling Party", "Corporate Trust Office", "Distribution Date", "$", "Equipment Notes", "Indenture", "Investment Earnings", "Liquidity Facility", "Moody's", "Operative Agreements", "Performing Equipment Note", "Performing Note Deficiency", "Person", "Pool Balance", "Rating Agency", "Refunding Agreement", "Regular Distribution Date", "Replacement Liquidity Facility", "Responsible Officer", "Scheduled Payment", "Special Payment", "Standard & Poor's", "Stated Interest Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Triggering Event", "Trust", "Trust Agreements", "Trustee", "Underwriters", "Underwriting Agreement", and "Written Notice". ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT Section 2.1 The Advances. The Liquidity Provider hereby irrevocably agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless the obligations of the Liquidity Provider shall be earlier terminated in accordance with the terms of Section 2.4(b)) in an aggregate amount at any time outstanding not to exceed the Commitment. 5 9 Section 2.2 Making the Advances. (a) Interest Advances shall be made in one or more Borrowings by delivery to the Liquidity Provider of one or more written and completed Notices of Borrowing in substantially the form of Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an amount not exceeding the Available Commitment at such time and shall be used solely for the payment when due of interest on the Class A Certificates at the Stated Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor Agreement. Each Interest Advance made hereunder shall automatically reduce the Available Commitment and the amount available to be borrowed hereunder by subsequent Advances by the amount of such Interest Advance (subject to reinstatement as provided in the next sentence). Upon repayment to the Liquidity Provider in full of the amount of any Interest Advance made pursuant to this Section 2.2(a), together with accrued interest thereon (as provided herein), the Available Commitment shall be reinstated by the amount of such repaid Interest Advance; provided, however, that the Available Commitment shall not be so reinstated at any time if (x) both (i) a Triggering Event shall have occurred and be continuing and (ii) a Performing Note Deficiency exists or (y) a Liquidity Event of Default shall have occurred and be continuing. (b) A Downgrade Advance shall be made in a single Borrowing upon a downgrading of the rating of the Liquidity Provider resulting in the Liquidity Provider's ratings not meeting the Threshold Rating (as provided for in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity Facility shall have been delivered to the Borrower in accordance with said Section 3.6(c), by delivery to the Liquidity Provider of a written and completed Notice of Borrowing in substantially the form of Annex II attached hereto, signed by a Responsible Officer of the Borrower, in an amount not exceeding the Available Commitment at such time, and shall be used to fund the Class A Cash Collateral Account in accordance with said Section 3.6(c). The Liquidity Provider shall promptly notify the Borrower of any downgrade of its unsecured debt rating by Moody's or Standard & Poor's below the applicable Threshold Rating. (c) A Final Advance shall be made by the Liquidity Provider without the necessity for a Notice of Borrowing at the option of the Liquidity Provider on the occurrence of an event described in Section 6.1(a) or 6.1(b) in an amount equal to the Available Commitment at such time, and shall be used to fund the Class A Cash Collateral Account. (d) Each Borrowing (other than under Section 2.2(c)) shall be made on notice in writing (a "Notice of Borrowing") in substantially the form required by Section 2.2(a) or 2.2(b), as the case may be, given not later than 12:00 Noon (New York City time) on the Business Day prior to the day of the proposed Borrowing by the Borrower to the Liquidity Provider. Upon 6 10 satisfaction of the conditions precedent set forth in Section 4.2 with respect to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New York City time) on the date of such Borrowing or on such later Business Day specified by the Borrower in such Notice of Borrowing, make available to the Borrower, in U.S. dollars and in immediately available funds, the amount of such Borrowing to be paid to the Borrower in accordance with its payment instructions. If a Notice of Borrowing is delivered by the Borrower in respect of any Borrowing after 12:00 Noon (New York City time) on a Business Day, the Liquidity Provider shall, before 12:00 Noon (New York City time) on the second Business Day next following the day of receipt of such Notice of Borrowing or on such later Business Day specified by the Borrower in such Notice of Borrowing, make available to the Borrower, in U.S. dollars and in immediately available funds, the amount of such Borrowing to be paid to the Borrower in accordance with its payment instructions. Payments of proceeds of a Borrowing shall be made by wire transfer of immediately available funds to the Borrower in accordance with such wire transfer instructions as the Borrower shall furnish from time to time to the Liquidity Provider for such purpose. Each Notice of Borrowing shall be irrevocable and binding on the Borrower. (e) Upon the making of any Advance requested pursuant to a Notice of Borrowing, in accordance with the Borrower's payment instructions, the Liquidity Provider shall be fully discharged of its obligation hereunder with respect to such Notice of Borrowing, and the Liquidity Provider shall not thereafter be obligated to make any further Advances hereunder in respect of such Notice of Borrowing to the Borrower or to any other person (including the holder of any Class A Certificate or the Class A Trustee) who makes to the Class A Trustee or the Borrower a demand for payment with respect to any Class A Certificate. By paying to the Borrower proceeds of Advances requested by the Borrower in accordance with the provisions of this Agreement, the Liquidity Provider makes no representation as to, and assumes no responsibility for, the correctness or sufficiency for any purpose of the amount of the Advances so made and requested. Section 2.3 Fees. (a) The Borrower agrees to pay to the Liquidity Provider a fee equal to 0.25% of the Commitment (as in effect on the Effective Date). Such fee shall be payable on the Effective Date. (b) The Borrower shall pay, or shall cause to be paid, to the Liquidity Provider, a fee equal to 0.40% per annum on the average Available Commitment from the Effective Date to the earlier of the date on which a Downgrade Advance is made and the Termination Date. Such fee shall be payable in arrears on each Regular Distribution Date. Nothing contained in this Section 2.3 shall require the Borrower to pay any amount under this Section 7 11 2.3 other than to the extent the Borrower shall have funds available therefor. Section 2.4 Reduction or Termination of the Commitment. (a) Automatic Reductions. Promptly following each date on which the Required Amount is reduced as a result of a reduction in the Pool Balance of the Class A Certificates or otherwise, the Commitment shall automatically be reduced to an amount equal to such reduced Required Amount (as calculated by the Borrower). The Borrower shall give notice of any such automatic reduction of the Commitment (substantially in the form of Annex IV hereto) to the Liquidity Provider (with a copy to America West) within two Business Days thereof. The failure by the Borrower to furnish any such notice shall not affect such automatic reduction of the Commitment. (b) Termination. Upon the making of any Downgrade Advance or Final Advance hereunder or the occurrence of the Termination Date, the obligation of the Liquidity Provider to make further Advances hereunder shall automatically and irrevocably terminate, and the Borrower shall not be entitled to request any further Borrowing hereunder. Section 2.5 Repayments of Interest Advances or the Final Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or to cause to be paid, to the Liquidity Provider on each date on which the Liquidity Provider shall make an Interest Advance or the Final Advance, an amount equal to (a) the amount of such Interest Advance or the Final Advance (any such Interest Advance or the Final Advance, until repaid, is referred to herein as an "Unpaid Advance"), plus (b) interest on the amount of each such Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9, unless otherwise waived by the Liquidity Provider, the Borrower shall be obligated, without notice of an Advance or demand for repayment from the Liquidity Provider (which notice and demand are hereby waived by the Borrower), to repay the Liquidity Provider for all Interest Advances and Final Advances on the same day as made and all Applied Downgrade Advances on the same day they became Applied Downgrade Advances. The Borrower and the Liquidity Provider agree that the repayment in full of each Interest Advance and the Final Advance on the date such Interest Advance or the Final Advance is made and each Applied Downgrade Advance on the date it becomes an Applied Downgrade Advance is intended to be a contemporaneous exchange for new value given to the Borrower by the Liquidity Provider. Section 2.6 Repayments of Downgrade Advances. (a) Amounts advanced hereunder in respect of a Downgrade Advance shall be deposited in the Class A Cash Collateral Account, and invested and withdrawn from the Class A Cash Collateral Account, as set forth in Sections 3.6(c), (e) and (f) of the Intercreditor 8 12 Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular Distribution Date, commencing on the first Regular Distribution Date after the making of a Downgrade Advance, interest on the principal amount of any such Downgrade Advance as provided in Section 3.7. Immediately upon the withdrawal of any amounts from the Class A Cash Collateral Account on account of a reduction in the Required Amount, the Borrower shall repay the Downgrade Advance in a principal amount equal to the amount of such reduction, plus interest on the principal amount repaid as provided in Section 3.7. (b) Upon the provision of a Replacement Liquidity Facility in replacement of this Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement, and prior to the effectiveness of any Replacement Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity Provider shall be repaid in full, whether from advances made by the Replacement Liquidity Provider, from amounts remaining on deposit in the Class A Cash Collateral Account after giving effect to any application of funds therefrom to any payment of interest on the Class A Certificates on the date of such replacement, or otherwise. Section 2.7 Payments to the Liquidity Provider Under the Intercreditor Agreement. In order to provide for payment or repayment to the Liquidity Provider of any amounts hereunder, the Intercreditor Agreement provides that amounts available and referred to in Articles II and III of the Intercreditor Agreement, to the extent payable to the Liquidity Provider pursuant to the terms of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the Liquidity Provider in accordance with the terms thereof. Amounts so paid to the Liquidity Provider shall be applied by the Liquidity Provider in the order of priority required by the applicable provisions of Articles II and III of the Intercreditor Agreement. Section 2.8 Book Entries. The Liquidity Provider shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower resulting from Advances made from time to time and the amounts of principal and interest payable hereunder and paid from time to time in respect thereof; provided, however, that the failure by the Liquidity Provider to maintain such account or accounts shall not affect the obligations of the Borrower in respect of Advances. Section 2.9 Payments from Available Funds Only. All payments to be made by the Borrower under this Agreement shall be made only from amounts received by it that constitute Scheduled Payments or Special Payments and only to the extent that the Borrower shall have sufficient income or proceeds therefrom to enable the Borrower to make payments in accordance with the terms 9 13 hereof after giving effect to the priority of payments provisions set forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will look solely to such amounts to the extent available for distribution to it as provided in the Intercreditor Agreement and this Agreement and that the Borrower, in its individual capacity, is not personally liable to it for any amounts payable or liability under this Agreement except as expressly provided in this Agreement, the Intercreditor Agreement or any Refunding Agreement. Amounts on deposit in the Class A Cash Collateral Account shall be available to make payments only to the extent and for the purposes expressly contemplated in Section 3.6(f) of the Intercreditor Agreement. ARTICLE III OBLIGATIONS OF THE BORROWER Section 3.1 Increased Costs. If the Liquidity Provider shall determine that (a) any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof or in the compliance by the Liquidity Provider (or its head office) with any applicable direction, request or requirement (whether or not having the force of law) of any central bank or competent governmental or other authority shall either (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans made by, the Liquidity Provider, or (ii) impose on the Liquidity Provider any other condition regarding this Agreement or any Advance, or (iii) change the basis of taxation of any amounts payable to the Liquidity Provider (other than Taxes imposed on the overall net or gross income of the Liquidity Provider) and (b) the result of any event referred to in the preceding clause (i), (ii) or (iii) shall be to increase the cost to the Liquidity Provider of issuing or maintaining its commitment or funding or maintaining Advances (which increase in cost shall be determined by the Liquidity Provider's reasonable allocations of the aggregate of such cost increases resulting from such event), then, no later than 30 days after demand by the Liquidity Provider, the Borrower shall pay, or cause to be paid, to the Liquidity Provider, from time to time as specified by the Liquidity Provider, additional amounts which shall be sufficient to compensate the Liquidity Provider for such increased cost. A certificate as to such increased cost incurred by the Liquidity Provider as a result of any event mentioned in clause (i), (ii) or (iii) above, prepared in reasonable detail and submitted by the Liquidity Provider to the Borrower, shall be conclusive, absent manifest error, as to the amount thereof. The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory 10 14 restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.1 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. Section 3.2 Capital Adequacy. If the Liquidity Provider shall determine that the adoption after the date hereof of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change after the date hereof in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance after the date hereof by the Liquidity Provider (or its head office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, is generally applicable to all banks domiciled in Belgium with branches in the United States and not related to the financial condition of the Liquidity Provider and has the effect of reducing the rate of return on the Liquidity Provider's capital as a consequence of issuing or maintaining its commitment hereunder or its funding or maintaining Advances to a level below that which the Liquidity Provider could have achieved but for such adoption, change or compliance (taking into consideration the Liquidity Provider's policies with respect to capital adequacy) by an amount deemed by the Liquidity Provider to be material, then, no later than 30 days after demand by the Liquidity Provider, the Borrower shall pay to the Liquidity Provider, from time to time as specified by the Liquidity Provider, additional amounts which shall be sufficient to compensate the Liquidity Provider for such reduction in respect of issuing or maintaining its commitment hereunder or its funding or maintaining Advances. A certificate as to such additional amount describing the event which has the effect of reducing the rate of return on the Liquidity Provider's capital, prepared in reasonable detail and submitted by the Liquidity Provider to the Borrower, shall be conclusive, absent manifest error, as to the amount thereof. The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.2 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. The Liquidity Provider further agrees that no amounts shall be payable under this Section 3.2 unless the Liquidity Provider is charging its other borrowers with whom it has agreements similar to this agreement the amounts that are payable to the Liquidity Provider under this Section 3.2. 11 15 Section 3.3 Payments Free of Deductions. All payments made by the Borrower under this Agreement shall be made free and clear of, and without reduction for or on account of, any present or future stamp or other taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed, excluding any Taxes imposed on the overall net income of the Liquidity Provider and excluding United States federal income tax withholding to the extent such withholding is, or would be, actually imposed upon payments to the Liquidity Provider as of the date of this Agreement (such non-excluded taxes being referred to herein, collectively, as "Non-Excluded Taxes" and, individually, as a "Non-Excluded Tax"). If any Non- Excluded Taxes are required to be withheld from any amounts payable to the Liquidity Provider under this Agreement, the amounts so payable to the Liquidity Provider shall be increased to the extent necessary to yield to the Liquidity Provider (after payment of all Non-Excluded Taxes and taxes imposed on the receipt of such increase) interest or any other such amounts payable under this Agreement at the rates or in the amounts specified in this Agreement. Whenever any Non-Excluded Tax is payable by the Borrower, promptly thereafter the Borrower shall send the Liquidity Provider certified copies of tax receipts evidencing such payment by the Borrower. The Liquidity Provider agrees to provide to the Borrower on or prior to the Effective Date, and from time to time thereafter prior to the expiration of the effectiveness of and promptly upon the occurrence of any event requiring a change in the most recent form previously delivered by it (and prior to the immediately following due date of any payment by the Borrower hereunder), to the extent that the Liquidity Provider is legally entitled to do so, two original Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that the Liquidity Provider is completely exempt from United States withholding tax on payments pursuant to this Agreement. The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.3 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. Section 3.4 Payments. The Borrower shall make or cause to be made each payment to the Liquidity Provider under this Agreement so as to cause the same to be received by the Liquidity Provider not later than 1:00 P.M. (New York City time) on the day when due. The Borrower shall make all such payments in lawful money of the United States of America, to the Liquidity 12 16 Provider in immediately available funds, by wire transfer to The Bank of New York, One Wall Street, New York, NY 10286, ABA No. 021-000-018, for the account of Kredietbank New York, Account No. 802-3015618 (referencing America West Airlines Liquidity Facility). Section 3.5 Computations. All computations of interest based on the Base Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and all computations of (x) interest based on the LIBOR Rate and (y) fees payable to the Liquidity Provider, shall be made on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Section 3.6 Payment on Non-Business Days. Whenever any payment to be made hereunder (other than a payment on LIBOR Advances) becomes due and payable on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and interest thereon shall be payable at the then applicable rate during such extension. If any payment on a LIBOR Advance becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. Section 3.7 Interest. (a) The Borrower shall pay, or shall cause to be paid, interest on (i) the unpaid principal amount of each Advance from and including the date of such Advance to but excluding the date such principal amount shall be paid in full and (ii) any other amount due hereunder (whether fees, commissions, expenses or other amounts or, to the extent permitted by law, installments of interest on Advances or any such other amount) which is not paid when due (whether at stated maturity, by acceleration or otherwise) from and including the due date thereof to but excluding the date such amount is paid in full, in each such case, at a fluctuating interest rate per annum for each day equal to the Applicable Liquidity Rate for such Advance for such day, but in no event at a rate per annum greater than the maximum rate permitted by applicable law; provided, however, that, if at any time the otherwise applicable interest rate as set forth in this Section 3.7 shall exceed the maximum rate permitted by applicable law, then any subsequent reduction in such interest rate will not reduce the rate of interest payable pursuant to this Section 3.7 below the maximum rate permitted by applicable law until the total amount of interest accrued equals the amount of interest that would have accrued if such otherwise applicable interest rate as set forth in this Section 3.7 had at all times been in effect. Nothing contained in this Section 3.7 shall require the Borrower to pay any amount 13 17 under this Section 3.7 other than to the extent the Borrower shall have funds available therefor. (b) Each Advance will be either a Base Rate Advance or a LIBOR Advance as provided in this Section. Each such Advance will be a Base Rate Advance for the period from the date of its borrowing to (but excluding) the third Business Day following the Liquidity Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance; provided that the Final Advance shall, until repaid in full, be a Base Rate Advance and the Borrower may not convert the Final Advance into a LIBOR Advance. (c) Each LIBOR Advance shall bear interest during each Interest Period at a per annum rate equal to the LIBOR Rate for such Interest Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on the last day of such Interest Period and, in the event of the payment of principal of such LIBOR Advance on a day other than such last day, on the date of such payment (to the extent of interest accrued on the amount of principal repaid). (d) Each Base Rate Advance shall bear interest at a per annum rate equal to the Base Rate plus the Applicable Margin for such Base Rate Advance, payable in arrears on each Regular Distribution Date and, in the event of the payment of principal of such Base Rate Advance on a day other than a Regular Distribution Date, on the date of such payment (to the extent of interest accrued on the amount of principal repaid). (e) Each amount not paid when due hereunder (whether fees, commissions, expenses or other amounts or, to the extent permitted by applicable law, installments of interest on Advances) shall bear interest at the Base Rate. (f) Each change in the Base Rate shall become effective immediately. Section 3.8 Replacement of Borrower. Subject to Section 5.2(b), from time to time, upon the effective date and time specified in a written and completed Notice of Replacement Borrower in substantially the form of Annex III attached hereto (a "Notice of Replacement Borrower") delivered to the Liquidity Provider by the then Borrower, the successor Borrower designated therein shall be substituted for as the Borrower for all purposes hereunder. Section 3.9 Funding Loss Indemnification. The Borrower shall pay to the Liquidity Provider, upon the request of the Liquidity Provider, such amount or amounts as shall be sufficient (in the reasonable opinion of the Liquidity Provider) 14 18 to compensate it for any loss, cost, or expense incurred as a result of: (a) Any payment or prepayment of a LIBOR Advance on a date other than the last day of the Interest Period for such Advance; or (b) Any failure by the Borrower to borrow a LIBOR Advance on the date for borrowing specified in the relevant notice under Section 2.2 or 3.7. Section 3.10 Illegality. Notwithstanding any other provision in this Agreement, if any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Liquidity Provider (or its Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for the Liquidity Provider (or its Lending Office) to maintain or fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity Provider, the outstanding principal amount of the LIBOR Advances shall be converted to Base Rate Advances (a) immediately upon demand of the Liquidity Provider, if such change or compliance with such request, in the judgment of the Liquidity Provider, requires immediate repayment; or (b) at the expiration of the last Interest Period to expire before the effective date of any such change or request. In the event any change of the nature described in the preceding sentence shall make it unlawful or impossible for the Liquidity Provider (or its Lending Office) to maintain or fund its Base Rate Advances, the Liquidity Provider shall have the right to cause a Replacement Liquidity Facility to be substituted for this Agreement, subject to (i) the satisfaction of the conditions precedent to the effectiveness of, and the other provisions regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the Intercreditor Agreement and (ii) such Replacement Liquidity Facility and Replacement Liquidity Provider being reasonably acceptable to America West. ARTICLE IV CONDITIONS PRECEDENT Section 4.1 Conditions Precedent to Effectiveness of Section 2.1. Section 2.1 of this Agreement shall become effective on and as of the first date (the "Effective Date") on which the following conditions precedent have been satisfied or waived: 15 19 (a) The Liquidity Provider shall have received on or before the Closing Date each of the following, each dated such date (except for those documents delivered pursuant to paragraphs (v) and (vii) of this Section 4.1(a)), and each in form and substance satisfactory to the Liquidity Provider: (i) This Agreement duly executed on behalf of the Borrower; (ii) The Intercreditor Agreement duly executed on behalf of each of the parties thereto; (iii) Counterparts (or certified copies thereof) of each of the Operative Agreements (other than this Agreement and the Intercreditor Agreement) which, when taken together, bear the signatures of all of the respective parties thereto and which are in full force and effect in accordance with their respective terms; (iv) A copy of the Prospectus and specimen copies of the Class A Certificates; (v) Evidence that, on the Effective Date, the Class A Certificates, the Class B Certificates, the Class C Certificates, the Class D Certificates and the Class E Certificates will receive long-term credit ratings from Moody's of not lower than A2, Baa2, Ba1, Ba3 and B1, respectively, and from Standard & Poor's of not lower than AA-, A-, BBB-, BB and B+, respectively; (vi) An executed or certified copy of each document, instrument, certificate and opinion delivered pursuant to the Class A Trust Agreement, the Intercreditor Agreement, the Refunding Agreements and the other Operative Agreements (together with, in the case of each such opinion (unless such opinion is addressed to the Liquidity Provider), other than the opinion of counsel for the Underwriters, a letter from the counsel rendering such opinion to the effect that the Liquidity Provider is entitled to rely on such opinion as if it were addressed to the Liquidity Provider); (vii) Evidence that there shall have been made and shall be in full force and effect, all filings, recordings and/or registrations, and there shall have been given or taken any notice or other similar action as may be reasonably necessary or, to the extent reasonably requested by the Liquidity Provider, reasonably advisable, in order to establish, perfect, protect and preserve the right, title and interest, 16 20 remedies, powers, privileges, liens and security interests of, or for the benefit of, the Trustees and the Liquidity Provider created by the Operative Agreements; (viii) Copies of the appraisals included in the Prospectus; (ix) A letter from America West agreeing to provide to the Liquidity Provider the periodic financial reports referred to in Section 8.04(a) of the Trust Agreements; and (x) Such other documents, instruments, opinions and approvals (and, if requested by the Liquidity Provider, certified duplicates or executed copies thereof) as the Liquidity Provider shall have reasonably requested. (b) The following statements shall be true and shall be deemed to have been represented by each party (other than clause (ii) below, which shall be deemed to have been represented only by America West) to the Refunding Agreements as being true on and as of the Effective Date: (i) The representations and warranties of such Person contained in each Refunding Agreement are true and correct on and as of the Effective Date as though made on and as of the Effective Date; and (ii) No event has occurred and is continuing, or would result from the entering into of this Agreement or the making of any Advance, which constitutes a Liquidity Event of Default. The Liquidity Provider shall have received payment in full of all fees and other sums required to be paid to or for the account of the Liquidity Provider on or prior to the Effective Date. (c) All conditions precedent to the issuance of the Certificates under the Trust Agreements shall have been satisfied, all conditions precedent to the effectiveness of the other Liquidity Facilities shall have been satisfied, and all conditions precedent to the purchase of the Certificates by the Underwriters under the Underwriting Agreement shall have been satisfied (except for any of such conditions precedent under the Underwriting Agreement that shall have been waived by the Underwriters). (d) The Borrower shall have received a certificate, dated the date hereof, signed by a duly authorized 17 21 representative of the Liquidity Provider, certifying that all conditions precedent to the effectiveness of Section 2.1 have been satisfied or waived (other than this Section 4.1(d)). Section 4.2 Conditions Precedent to Borrowing. The obligation of the Liquidity Provider to make an Advance on the occasion of each Borrowing shall be subject to the conditions precedent that the Effective Date shall have occurred and, except in the case of a Final Advance, prior to the date of such Borrowing, the Borrower shall have delivered a Notice of Borrowing which conforms to the terms and conditions of this Agreement and has been completed as may be required by the relevant form of the Notice of Borrowing for the type of Advance requested. ARTICLE V COVENANTS Section 5.1 Affirmative Covenants of the Borrower. So long as any Advance shall remain unpaid or the Liquidity Provider shall have any Commitment hereunder or the Borrower shall have any obligation to pay any amount to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity Provider shall otherwise consent in writing: (a) Performance of This and Other Agreements. Punctually pay or cause to be paid all amounts payable by it under this Agreement and the other Operative Agreements and observe and perform in all material respects the conditions, covenants and requirements applicable to it contained in this Agreement and the other Operative Agreements. (b) Reporting Requirements. Furnish to the Liquidity Provider with reasonable promptness, such information and data with respect to the transactions contemplated by the Operative Agreements as from time to time may be reasonably requested by the Liquidity Provider; and permit the Liquidity Provider, upon reasonable notice, to inspect the Borrower's books and records with respect to such transactions and to meet with officers and employees of the Borrower to discuss such transactions. Section 5.2 Negative Covenants of the Borrower. So long as any Advance shall remain unpaid or the Liquidity Provider shall have any Commitment hereunder or the Borrower shall have any obligation to pay any amount to the Liquidity Provider hereunder, the Borrower will not, without the written consent of the Liquidity Provider: 18 22 (a) Amendments. Modify, amend or supplement; or give any consent to any modification, amendment, or supplement; or make any waiver with respect to; any provision of the Trust Agreements or the Intercreditor Agreement, except for any supplemental agreement to the Trust Agreements provided for in Section 9.01 thereof. (b) Borrower. Appoint or permit or suffer to be appointed any successor Borrower without the prior written approval of the Liquidity Provider (which approval shall not be unreasonably withheld). ARTICLE VI FINAL ADVANCE Section 6.1 Final Advance. If (a) both (i) a Triggering Event shall have occurred and be continuing and (ii) a Performing Note Deficiency exists or (b) a Liquidity Event of Default shall have occurred and be continuing, the Liquidity Provider may, in its discretion, make a Final Advance whereupon (i) the Liquidity Provider shall have no further obligation to make Advances hereunder, (ii) all other outstanding Advances shall be automatically converted into Final Advances for purposes of determining the Applicable Liquidity Rate for interest payable thereon, and (iii) subject to Sections 2.7 and 2.9, all Advances, any accrued interest thereon and any other amounts outstanding hereunder shall become immediately due and payable to the Liquidity Provider. ARTICLE VII MISCELLANEOUS Section 7.1 Amendments, Etc. No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Liquidity Provider, and, in the case of an amendment, the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 7.2 Notices, Etc. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telecopier and mailed or delivered or sent by telecopier): Borrower: Fleet National Bank 777 Main Street Hartford, CT 06115 19 23 Attention: Corporate Trust Administration Telecopy: (860) 986-7920 Liquidity Provider: Kredietbank N.V. New York Branch 125 West 55th Street New York, NY 10019 Attention: General Manager Telecopy: (212) 956-5580 or, as to each of the foregoing, at such other address as shall be designated by such Person in a written notice to the others. All such notices and communications shall be effective (i) if given by telecopier, when transmitted to the telecopier number specified above, (ii) if given by mail, when deposited in the mails addressed as specified above, and (iii) if given by other means, when delivered at the address specified above, except that written notices to the Liquidity Provider pursuant to the provisions of Articles II and III hereof shall not be effective until received by the Liquidity Provider. A copy of all notices delivered hereunder to either party shall in addition be delivered to each of the parties to the Refunding Agreements at their respective addresses set forth therein. Section 7.3 No Waiver; Remedies. No failure on the part of the Liquidity Provider to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 7.4 Further Assurances. The Borrower agrees to do such further acts and things and to execute and deliver to the Liquidity Provider such additional assignments, agreements, powers and instruments as the Liquidity Provider may reasonably require or deem advisable to carry into effect the purposes of this Agreement and the other Operative Agreements or to better assure and confirm unto the Liquidity Provider its rights, powers and remedies hereunder and under the other Operative Agreements. Section 7.5 Indemnification; Survival of Certain Provisions. The Liquidity Provider shall be indemnified hereunder to the extent and in the manner described in Sections 10 and 13 of the Lease. In addition, the Borrower agrees to indemnify, protect, defend and hold harmless the Liquidity Provider from, against and in respect of, and shall pay on demand, all Expenses of any kind or nature whatsoever, whether arising before, on or after the date hereof, that may be imposed, 20 24 incurred by or asserted against any Liquidity Indemnitee, in any way relating to, resulting from, or arising out of or in connection with, this Agreement, the Intercreditor Agreement or the Refunding Agreements; provided, however, that the Borrower shall not be required to indemnify, protect, defend and hold harmless any Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee (i) to the extent such Expense is attributable to the gross negligence or willful misconduct of such Liquidity Indemnitee or any Related Indemnitee, (ii) that is ordinary and usual operating overhead expense or (iii) to the extent such Expense is attributable to the failure by such Liquidity Indemnitee or its Related Indemnitee to perform or observe any agreement, covenant or condition on its part to be performed or observed in any Operative Agreement. The indemnities contained in such Sections 10 and 13 of the Lease, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall survive the termination of this Agreement. Section 7.6 Liability of the Liquidity Provider. (a) Neither the Liquidity Provider nor any of its officers or directors shall be liable or responsible for: (i) the use which may be made of the Advances or any acts or omissions of the Borrower or any beneficiary or transferee in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; or (iii) the making of Advances by the Liquidity Provider against delivery of a Notice of Borrowing and other documents which do not comply with the terms hereof; provided, however, that the Borrower shall have a claim against the Liquidity Provider, and the Liquidity Provider shall be liable to the Borrower, to the extent of any damages suffered by the Borrower which were the result of (A) the Liquidity Provider's willful misconduct or negligence in determining whether documents presented hereunder comply with the terms hereof, or (B) any breach by the Liquidity Provider of any of the terms of this Agreement, including, but not limited to, the Liquidity Provider's failure to make lawful payment hereunder after the delivery to it by the Borrower of a Notice of Borrowing strictly complying with the terms and conditions hereof. (b) The Liquidity Provider shall not be liable or responsible in any respect for (i) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with this Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action, inaction or omission which may be taken by it in good faith, absent willful misconduct or negligence (in which event the extent of the Liquidity Provider's potential liability to the Borrower shall be limited as set forth in the immediately preceding paragraph), in connection with this Agreement or any Notice of Borrowing. 21 25 Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to pay, or cause to be paid (A) on the Effective Date and on such later date or dates on which the Liquidity Provider shall make demand, all reasonable out-of-pocket costs and expenses of the Liquidity Provider in connection with the preparation, negotiation, execution, delivery, filing and recording of this Agreement, any other Operative Agreement and any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees and expenses of outside counsel for the Liquidity Provider and (B) on demand, all reasonable costs and expenses of the Liquidity Provider (including reasonable counsel fees and expenses) in connection with (i) the enforcement of this Agreement or any other Operative Agreement, (ii) the modification or amendment of, or supplement to, this Agreement or any other Operative Agreement or such other documents which may be delivered in connection herewith or therewith (whether or not the same shall become effective) or (iii) any action or proceeding relating to any order, injunction, or other process or decree restraining or seeking to restrain the Liquidity Provider from paying any amount under this Agreement, the Intercreditor Agreement or any other Operative Document or otherwise affecting the application of funds in the Cash Collateral Accounts. In addition, the Borrower shall pay any and all recording, stamp and other similar taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, any other Operative Agreement and such other documents, and agrees to save the Liquidity Provider harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes or fees. Section 7.8 Binding Effect; Participations. (a) This Agreement shall be binding upon and inure to the benefit of the Borrower and the Liquidity Provider and their respective successors and assigns, except that neither the Liquidity Provider (except as otherwise provided in this Section 7.8) nor the Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the other party, subject to the requirement of Section 7.8(b). The Liquidity Provider may grant participations herein or in any of its rights or security hereunder and under the other Operative Agreements to such Persons as the Liquidity Provider may in its sole discretion select, subject to the requirement of Section 7.8(b). No such participation by the Liquidity Provider, however, will relieve the Liquidity Provider of its obligations hereunder. In connection with any participation or any proposed participation, the Liquidity Provider may disclose to the participant or the proposed participant any information that the Borrower is required to deliver or to disclose to the Liquidity Provider pursuant to this Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's source of funds may derive in part from its participants. Accordingly, references in 22 26 this Agreement and the other Operative Agreements to determinations, reserve and capital adequacy requirements, increased costs, reduced receipts and the like as they pertain to the Liquidity Provider shall be deemed also to include those of each of its participants (subject, in each case, to the maximum amount that would have been incurred by or attributable to the Liquidity Provider directly if the Liquidity Provider, rather than the participant, had held the interest participated). (b) If, pursuant to subsection (a) above, the Liquidity Provider sells any participation to any bank or other entity (each, a "Participant"), then, concurrently with the effectiveness of such participation, the Participant shall (i) represent to the Liquidity Provider (for the benefit of the Liquidity Provider and the Borrower) either (A) that it is incorporated under the laws of the United States or a state thereof or (B) that under applicable law and treaties, no taxes will be required to be withheld by the Borrower or the Liquidity Provider with respect to any payments to be made to such Participant in respect of this Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a statement that it is incorporated under the laws of the United States or a state thereof or (y) if it is not so incorporated, two copies of a properly completed United States Internal Revenue Service Form 4224 or Form 1001, as appropriate, or other applicable form, certificate or document prescribed by the Internal Revenue Service certifying, in each case, such Participant's entitlement to a complete exemption from United States federal withholding tax in respect to any and all payments to be made hereunder, and (iii) agree (for the benefit of the Liquidity Provider and the Borrower) to provide the Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date that any such form expires or becomes obsolete or (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it and prior to the immediately following due date of any payment by the Borrower hereunder, certifying in the case of a Form 1001 or Form 4224 that such Participant is entitled to a complete exemption from United States federal withholding tax on payments under this Agreement. Unless the Borrower has received forms or other documents reasonably satisfactory to it indicating that payments hereunder are not subject to United States federal withholding tax, the Borrower will withhold taxes as required by law from such payments at the applicable statutory rate without any obligation to gross-up or indemnify pursuant to Section 3.3. (c) Notwithstanding the other provisions of this Section 7.8, the Liquidity Provider may assign and pledge all or any portion of the Advances owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal 23 27 Reserve Bank, provided that any payment in respect of such assigned Advances made by the Borrower to the Liquidity Provider in accordance with the terms of this Agreement shall satisfy the Borrower's obligations hereunder in respect of such assigned Advance to the extent of such payment. No such assignment shall release the Liquidity Provider from its obligations hereunder. Section 7.9 Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial. (a) Each of the parties hereto hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement or any other Operative Agreement, or for recognition and enforcement of any judgment in respect hereof or thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) if such party does not maintain an office for the transaction of its business in New York, agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form and mail), postage prepaid, to each party hereto at its address set forth in Section 7.2, or at such other address of which the Liquidity Provider shall have been notified pursuant thereto; and 24 28 (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. (b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and all other common law and statutory claims. The Borrower and the Liquidity Provider each warrant and represent that it has reviewed this waiver with its legal counsel, and that it knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY. Section 7.12 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. Section 7.13 Entirety. This Agreement and the other Operative Agreements constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior understandings and agreements of such parties. Section 7.14 Headings; Section References. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Unless the context otherwise requires or otherwise indicated herein, all Section references in this Agreement are references to Sections hereof. Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. 25 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first set forth above. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: KREDIETBANK N.V., NEW YORK BRANCH, as Liquidity Provider By ________________________________ Name: Title: By ________________________________ Name: Title: 26 30 Annex I to Irrevocable Revolving Credit Agreement INTEREST ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned borrower (the "Borrower"), hereby certifies to KREDIETBANK N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class A Certificates dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of an Interest Advance by the Liquidity Provider to be used for the payment of interest on the Class A Certificates which was payable on the Distribution Date falling on _____________ in accordance with the terms and provisions of the Class A Trust Agreement and the Class A Certificates and has not been paid pursuant to clause fourth of Section 3.2 of the Intercreditor Agreement or clause sixth of Section 3.3 of the Intercreditor Agreement, which Advance is requested to be made on _____________. (3) The amount of the Interest Advance requested hereby (i) is $___________ , to be applied in respect of the payment of interest which was due and payable on the Class A Certificates on such Distribution Date, (ii) does not include any amount with respect to the payment of principal of, or premium on, the Class A Certificates, the Class B Certificates, the Class C Certificates, the Class D Certificates or Class E Certificates, or interest on the Class B Certificates, the Class C Certificates, the Class D Certificates or the Class E Certificates, (iii) was computed in accordance with the provisions of the Class A Certificates, the Class A Trust Agreement and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), (iv) does not exceed the Available Commitment on the date hereof, and (v) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will apply the same in accordance with the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the case may be, (b) no portion of such amount shall be applied by the Borrower for any other purpose and (c) no portion of such amount until so 31 applied shall be commingled with other funds held by the Borrower. (5) The Borrower hereby requests that the Advance requested hereby be a Base Rate Advance and that such Base Rate Advance be converted into a LIBOR Rate Advance on the third Business Day following your receipt of this notice. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, the making of the Interest Advance as requested by this Notice of Borrowing shall automatically reduce, subject to reinstatement in accordance with the terms of the Liquidity Agreement, the Available Commitment by an amount equal to the amount of the Interest Advance requested to be made hereby as set forth in clause (i) of paragraph (3) of this Certificate and such reduction shall automatically result in corresponding reductions in the amounts available to be borrowed pursuant to a subsequent Advance. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _ day of ______________, ________. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 2 32 SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING [Insert Copy of Computations in accordance with Interest Advance Notice of Borrowing] 3 33 Annex II to Irrevocable Revolving Credit Agreement DOWNGRADE ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned subordination agent (the "Borrower"), hereby certifies to KREDIETBANK, N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class A Certificates dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of the Downgrade Advance by the Liquidity Provider to be used for the funding of the Class A Cash Collateral Account in accordance with Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading of the debt rating of the Liquidity Provider issued by either Rating Agency below the applicable Threshold Rating, which Advance is requested to be made on ______________________. (3) The amount of the Downgrade Advance requested hereby (i) is $___________, which equals the Available Commitment on the date hereof and is to be applied in respect of the funding of the Class A Cash Collateral Account in accordance with Section 3.6(c) of the Intercreditor Agreement, (ii) does not include any amount with respect to the payment of the principal of, or premium on, the Class A Certificates, or principal of, or interest or premium on, the Class B Certificates, the Class C Certificates, the Class D Certificates or the Class E Certificates, (iii) was computed in accordance with the provisions of the Class A Certificates, the Class A Trust Agreement and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), and (iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing under the Liquidity Agreement. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will deposit such amount in the Class A Cash Collateral Account and apply the same in accordance with the terms of Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such amount shall be applied by the Borrower for any other purpose and (c) no portion of such amount until so applied shall be commingled with other funds held by the Borrower. 34 (5) The Borrower hereby requests that the Advance requested hereby be a Base Rate Advance and that such Base Rate Advance be converted into a LIBOR Rate Advance on the third Business Day following your receipt of this notice. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of the Downgrade Advance as requested by this Notice of Borrowing shall automatically and irrevocably terminate the obligation of the Liquidity Provider to make further Advances under the Liquidity Agreement; and (B) following the making by the Liquidity Provider of the Downgrade Advance requested by this Notice of Borrowing, the Borrower shall not be entitled to request any further Advances under the Liquidity Agreement. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _ day of __________, ________. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 2 35 SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING [Insert Copy of computations in accordance with Downgrade Advance Notice of Borrowing] 36 Annex III to Irrevocable Revolving Credit Agreement NOTICE OF REPLACEMENT BORROWER [Date] Ladies and Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: [Name of Transferee] [Address of Transferee] all rights of the undersigned as Borrower under the Liquidity Agreement referred to above. The transferee has succeeded the undersigned as Subordination Agent under the Intercreditor Agreement referred to in the first paragraph of the Liquidity Agreement. By this transfer, all rights of the undersigned as Borrower under the Liquidity Agreement are transferred to the transferee and the transferee shall hereafter have the sole rights as Borrower thereunder. The undersigned shall pay any costs and expenses of such transfer, including, but not limited to, transfer taxes or governmental charges. We ask that this transfer be effective as of _______, _____. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 37 Annex IV to Irrevocable Revolving Credit Agreement NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT [Date] Ladies and Gentlemen: The undersigned, a duly authorized signatory of the undersigned subordination agent (the "Borrower"), hereby notifies Kredietbank N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that, pursuant to Section 2.4(a) of the Liquidity Agreement, the Commitment has been automatically reduced to $_________. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _____ day of __________, ________. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By _______________________________ Name: Title: 2 EX-4.8 9 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS B 1 EXHIBIT 4.8 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS B CERTIFICATES Dated as of November 26, 1996 between FLEET NATIONAL BANK, as Subordination Agent, as agent and trustee for the America West Airlines Pass Through Trust 1996-1B, as Borrower and KREDIETBANK N.V., NEW YORK BRANCH, as Liquidity Provider Relating to America West Airlines Pass Through Trust 1996-1B 6.93% America West Airlines Pass Through Certificates, Series 1996-1B 2 TABLE OF CONTENTS
Page ARTICLE I........................................... 1 DEFINITIONS................................................. 1 Section 1.1 Certain Defined Terms....................................... 1 ARTICLE II.......................................... 5 AMOUNT AND TERMS OF THE COMMITMENT.......................... 5 Section 2.1 The Advances................................................ 5 Section 2.2 Making the Advances......................................... 6 Section 2.3 Fees........................................................ 7 Section 2.4 Reduction or Termination of the Commitment.................. 8 Section 2.5 Repayments of Interest Advances or the Final Advance........ 8 Section 2.6 Repayments of Downgrade Advances............................ 9 Section 2.7 Payments to the Liquidity Provider Under the Intercreditor Agreement................................. 9 Section 2.8 Book Entries................................................ 9 Section 2.9 Payments from Available Funds Only.......................... 10 ARTICLE III OBLIGATIONS OF THE BORROWER................................. 10 Section 3.1 Increased Costs............................................. 10 Section 3.2 Capital Adequacy............................................ 11 Section 3.3 Payments Free of Deductions................................. 12 Section 3.4 Payments.................................................... 12 Section 3.5 Computations................................................ 13 Section 3.6 Payment on Non-Business Days................................ 13 Section 3.7 Interest.................................................... 13 Section 3.8 Replacement of Borrower..................................... 14 Section 3.9 Funding Loss Indemnification................................ 14 Section 3.10 Illegality................................................. 15 ARTICLE IV CONDITIONS PRECEDENT........................................ 15 Section 4.1 Conditions Precedent to Effectiveness of Section 2.1........ 15 Section 4.2 Conditions Precedent to Borrowing........................... 18 ARTICLE V COVENANTS .................................................. 18 Section 5.1 Affirmative Covenants of the Borrower....................... 18 Section 5.2 Negative Covenants of the Borrower.......................... 18
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Page ARTICLE VI FINAL ADVANCE............................................... 19 Section 6.1 Final Advance............................................... 19 ARTICLE VII MISCELLANEOUS............................................... 19 Section 7.1 Amendments, Etc............................................. 19 Section 7.2 Notices, Etc................................................ 19 Section 7.3 No Waiver; Remedies......................................... 20 Section 7.4 Further Assurances.......................................... 20 Section 7.5 Indemnification; Survival of Certain Provisions............. 20 Section 7.6 Liability of the Liquidity Provider......................... 21 Section 7.7 Costs, Expenses and Taxes................................... 21 Section 7.8 Binding Effect; Participations.............................. 22 Section 7.9 Severability................................................ 24 Section 7.10 GOVERNING LAW.............................................. 24 Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial........... 24 Section 7.12 Execution in Counterparts.................................. 25 Section 7.13 Entirety................................................... 25 Section 7.14 Headings; Section References............................... 25 Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........... 25
Annex I - Interest Advance Notice of Borrowing Annex II - Downgrade Advance Notice of Borrowing Annex III - Notice of Replacement Borrower Annex IV - Notice of Automatic Reduction of Commitment ii 4 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS B CERTIFICATES IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS B CERTIFICATES dated as of November 26, 1996 between FLEET NATIONAL BANK, a national banking association, not in its individual capacity but solely as Subordination Agent under the Intercreditor Agreement (each as defined below), as agent and trustee for the Class B Trust (as defined below) (the "Borrower"), and KREDIETBANK N.V., acting through its New York Branch (the "Liquidity Provider"). W I T N E S S E T H WHEREAS, pursuant to the Class B Trust Agreement (such term and all other capitalized terms used in these recitals having the meanings set forth or referred to in Section 1.1), the Class B Trust is issuing the Class B Certificates; and WHEREAS, the Borrower, in order to support the timely payment of a portion of the interest on the Class B Certificates in accordance with their terms, has requested the Liquidity Provider to enter into this Agreement, providing in part for the Borrower to request in specified circumstances that advances be made hereunder. NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1 Certain Defined Terms. (a) Definitions. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise, the following capitalized terms shall have the following respective meanings for all purposes of this Agreement: "Advance" means an Interest Advance, a Final Advance or a Downgrade Advance, as the case may be. "Applicable Liquidity Rate" means the rates of interest specified in Section 3.7 with respect to any Advance. "Applicable Margin" means (x) with respect to any Downgrade Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per annum and (y) with respect to any other Advance including an Applied Downgrade Advance 1.5% (150 basis points) per annum. "Applied Downgrade Advance" means any amount in respect of a Downgrade Advance withdrawn from the Class B Cash Collateral Account for the purpose of paying interest on the Class B 5 Certificates in accordance with Section 3.6(f) of the Inter-creditor Agreement. "Available Commitment" means, at any time of determination, an amount equal to (i) the Commitment at such time less (ii) subject to the proviso contained in the third sentence of Section 2.2(a), the aggregate amount of each Advance outstanding at such time; provided that following a Downgrade Advance or a Final Advance, the Available Commitment shall be zero. "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of (i) the base commercial lending rate announced from time to time by the Liquidity Provider, or (ii) the rate quoted by the Liquidity Provider, at approximately 11:00 A.M., New York City time, to dealers in the New York Federal funds market for overnight offering of dollars by the Liquidity Provider, for deposit plus .50 of 1 percent (.50%). "Base Rate Advance" means an Advance that bears interest at a rate based upon the Base Rate. "Borrower" has the meaning assigned to such term in the recital of parties to this Agreement. "Borrowing" means the making of Advances requested by delivery of a Notice of Borrowing or pursuant to Section 6.1. "Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in New York, New York or Hartford, Connecticut, and, if the applicable Business Day relates to any Advance or other amount bearing interest based on the LIBOR Rate, on which dealings are carried on in the London interbank market. "Commitment" means, initially, $3,859,559.55 as the same may be reduced from time to time in accordance with Section 2.4(a). "Downgrade Advance" means an Advance made pursuant to Section 2.2(b). "Effective Date" has the meaning specified in Section 4.1. The delivery of the certificate of the Liquidity Provider contemplated by Section 4.1(d) shall be conclusive evidence that the Effective Date has occurred. "Expenses" means liabilities, obligations, damages, settlements, penalties, claims, actions, suits, costs, expenses and disbursements (including, without limitation, reasonable fees 2 6 and disbursements of legal counsel and costs of investigation), provided that Expenses shall not include any Taxes. "Expiry Date" means July 17, 2009. "Final Advance" means an Advance made pursuant to Sections 2.2(c) and 6.1. "Intercreditor Agreement" means the Intercreditor Agreement dated the date hereof, among the Trustees, the Liquidity Provider, the liquidity provider under each Liquidity Facility (other than this Agreement) and the Subordination Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Interest Advance" means an Advance made pursuant to Section 2.2(a). "Interest Period" means, with respect to any LIBOR Advance, each of the following periods: (i) the period beginning on the date such LIBOR Advance is made (or is converted from a Base Rate Advance) and ending on the next Regular Distribution Date; and (ii) each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the next Regular Distribution Date. "Lending Office" means the lending office of the Liquidity Provider, presently located at 125 West 55th Street, New York, NY 10019, or such other lending office as the Liquidity Provider from time to time shall notify the Borrower at its lending office hereunder. "LIBOR Advance" means an Advance bearing interest at a rate based upon the LIBOR Rate. "LIBOR Rate" means, with respect to any Interest Period, the rate per annum at which deposits in U.S. Dollars are offered for the relevant Interest Period by the Liquidity Provider to prime banks in the London interbank market at approximately 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in the principal amount of the Advance to which such Interest Period is to apply and for a period of time comparable to such Interest Period, as quoted by the Liquidity Provider to the Subordination Agent. "Liquidity Event of Default" means the occurrence of the following: all of the Equipment Notes shall have been either declared to be immediately due and payable or shall not have been paid at their final maturity. A Liquidity Event of Default shall 3 7 not occur upon an automatic acceleration of the Equipment Notes as a result of an America West Bankruptcy Event. "Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) each affiliate of the Liquidity Provider, (iii) the respective directors, officers, employees, agents and servants of the Liquidity Provider and its affiliates, and (iv) the successors and permitted assigns of the persons described in clauses (i) through (iii), inclusive. "Liquidity Provider" has the meaning assigned to such term in the recital of parties to this Agreement. "Non-Excluded Tax" has the meaning specified in Section 3.3. "Notice of Borrowing" has the meaning specified in Section 2.2(d). "Notice of Replacement Borrower" has the meaning specified in Section 3.8. "Participant" has the meaning assigned to such term in Section 7.8(b). "Prospectus" means the prospectus included in the registration statement on Form S-3 (File No. 333-14691) filed by America West relating to certain pass through certificates, as such Prospectus may be amended or supplemented. "Related Indemnitee" means, with respect to any Liquidity Indemnitee, its director, officer, employee, agent, affiliate or employer. "Replenishment Amount" has the meaning assigned to such term in Section 2.6(b). "Required Amount" means, for any day, the sum of the aggregate amount of interest, calculated at the rate per annum equal to the Stated Interest Rate for the Class B Certificates, that would be payable on the Class B Certificates on each of the three successive semiannual Regular Distribution Dates immediately following such day or, if such day is a Regular Distribution Date, on such day and the succeeding two semiannual Regular Distribution Dates, in each case calculated on the basis of the Pool Balance of the Class B Certificates on such day and without regard to expected future payments of principal on the Class B Certificates. "Termination Date" means the earliest to occur of the following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to the Liquidity Provider a certificate, signed 4 8 by a Responsible Officer of the Borrower, certifying that all of the Class B Certificates have been paid in full (or provision has been made for such payment in accordance with the Intercreditor Agreement and the Trust Agreements) or are otherwise no longer entitled to the benefits of this Agreement; (iii) the date on which the Borrower delivers to the Liquidity Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that a Replacement Liquidity Facility has been substituted for this Agreement in full pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date on which the Liquidity Provider makes the Final Advance; and (v) the date on which no Advance is or may (including by reason of reinstatement as herein provided) become available for a Borrowing hereunder. "Unpaid Advance" has the meaning assigned to such term in Section 2.5. (b) Terms Defined in the Intercreditor Agreement. For all purposes of this Agreement, the following terms shall have the respective meanings assigned to such terms in the Intercreditor Agreement: "America West", "America West Bankruptcy Event", "Certificates", "Class A Certificates", "Class B Certificates", "Class B Certificateholders", "Class B Cash Collateral Account", "Class B Trust", "Class B Trust Agreement", "Class B Trustee", "Class C Certificates", "Class D Certificates", "Class E Certificates", "Closing Date", "Controlling Party", "Corporate Trust Office", "Distribution Date", "$", "Equipment Notes", "Indenture", "Investment Earnings", "Liquidity Facility", "Moody's", "Operative Agreements", "Performing Equipment Note", "Performing Note Deficiency", "Person", "Pool Balance", "Rating Agency", "Refunding Agreement", "Regular Distribution Date", "Replacement Liquidity Facility", "Responsible Officer", "Scheduled Payment", "Special Payment", "Standard & Poor's", "Stated Interest Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Triggering Event", "Trust", "Trust Agreements", "Trustee", "Underwriters", "Underwriting Agreement", and "Written Notice". ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT Section 2.1 The Advances. The Liquidity Provider hereby irrevocably agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless the obligations of the Liquidity Provider shall be 5 9 earlier terminated in accordance with the terms of Section 2.4(b)) in an aggregate amount at any time outstanding not to exceed the Commitment. Section 2.2 Making the Advances. (a) Interest Advances shall be made in one or more Borrowings by delivery to the Liquidity Provider of one or more written and completed Notices of Borrowing in substantially the form of Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an amount not exceeding the Available Commitment at such time and shall be used solely for the payment when due of interest on the Class B Certificates at the Stated Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor Agreement. Each Interest Advance made hereunder shall automatically reduce the Available Commitment and the amount available to be borrowed hereunder by subsequent Advances by the amount of such Interest Advance (subject to reinstatement as provided in the next sentence). Upon repayment to the Liquidity Provider in full of the amount of any Interest Advance made pursuant to this Section 2.2(a), together with accrued interest thereon (as provided herein), the Available Commitment shall be reinstated by the amount of such repaid Interest Advance; provided, however, that the Available Commitment shall not be so reinstated at any time if (x) both (i) a Triggering Event shall have occurred and be continuing and (ii) a Performing Note Deficiency exists or (y) a Liquidity Event of Default shall have occurred and be continuing. (b) A Downgrade Advance shall be made in a single Borrowing upon a downgrading of the rating of the Liquidity Provider resulting in the Liquidity Provider's ratings not meeting the Threshold Rating (as provided for in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity Facility shall have been delivered to the Borrower in accordance with said Section 3.6(c), by delivery to the Liquidity Provider of a written and completed Notice of Borrowing in substantially the form of Annex II attached hereto, signed by a Responsible Officer of the Borrower, in an amount not exceeding the Available Commitment at such time, and shall be used to fund the Class B Cash Collateral Account in accordance with said Section 3.6(c). The Liquidity Provider shall promptly notify the Borrower of any downgrade of its unsecured debt rating by Moody's or Standard & Poor's below the applicable Threshold Rating. (c) A Final Advance shall be made by the Liquidity Provider without the necessity for a Notice of Borrowing at the option of the Liquidity Provider on the occurrence of an event described in Section 6.1(a) or 6.1(b) in an amount equal to the Available Commitment at such time, and shall be used to fund the Class B Cash Collateral Account. (d) Each Borrowing (other than under Section 2.2(c)) shall be made on notice in writing (a "Notice of Borrowing") in 6 10 substantially the form required by Section 2.2(a) or 2.2(b), as the case may be, given not later than 12:00 Noon (New York City time) on the Business Day prior to the day of the proposed Borrowing by the Borrower to the Liquidity Provider. Upon satisfaction of the conditions precedent set forth in Section 4.2 with respect to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New York City time) on the date of such Borrowing or on such later Business Day specified by the Borrower in such Notice of Borrowing, make available to the Borrower, in U.S. dollars and in immediately available funds, the amount of such Borrowing to be paid to the Borrower in accordance with its payment instructions. If a Notice of Borrowing is delivered by the Borrower in respect of any Borrowing after 12:00 Noon (New York City time) on a Business Day, the Liquidity Provider shall, before 12:00 Noon (New York City time) on the second Business Day next following the day of receipt of such Notice of Borrowing or on such later Business Day specified by the Borrower in such Notice of Borrowing, make available to the Borrower, in U.S. dollars and in immediately available funds, the amount of such Borrowing to be paid to the Borrower in accordance with its payment instructions. Payments of proceeds of a Borrowing shall be made by wire transfer of immediately available funds to the Borrower in accordance with such wire transfer instructions as the Borrower shall furnish from time to time to the Liquidity Provider for such purpose. Each Notice of Borrowing shall be irrevocable and binding on the Borrower. (e) Upon the making of any Advance requested pursuant to a Notice of Borrowing, in accordance with the Borrower's payment instructions, the Liquidity Provider shall be fully discharged of its obligation hereunder with respect to such Notice of Borrowing, and the Liquidity Provider shall not thereafter be obligated to make any further Advances hereunder in respect of such Notice of Borrowing to the Borrower or to any other person (including the holder of any Class B Certificate or the Class B Trustee) who makes to the Class B Trustee or the Borrower a demand for payment with respect to any Class B Certificate. By paying to the Borrower proceeds of Advances requested by the Borrower in accordance with the provisions of this Agreement, the Liquidity Provider makes no representation as to, and assumes no responsibility for, the correctness or sufficiency for any purpose of the amount of the Advances so made and requested. Section 2.3 Fees. (a) The Borrower agrees to pay to the Liquidity Provider a fee equal to 0.25% of the Commitment (as in effect on the Effective Date). Such fee shall be payable on the Effective Date. (b) The Borrower shall pay, or shall cause to be paid, to the Liquidity Provider, a fee equal to 0.40% per annum on the average Available Commitment from the Effective Date to the 7 11 earlier of the date on which a Downgrade Advance is made and the Termination Date. Such fee shall be payable in arrears on each Regular Distribution Date. Nothing contained in this Section 2.3 shall require the Borrower to pay any amount under this Section 2.3 other than to the extent the Borrower shall have funds available therefor. Section 2.4 Reduction or Termination of the Commitment. (a) Automatic Reductions. Promptly following each date on which the Required Amount is reduced as a result of a reduction in the Pool Balance of the Class B Certificates or otherwise, the Commitment shall automatically be reduced to an amount equal to such reduced Required Amount (as calculated by the Borrower). The Borrower shall give notice of any such automatic reduction of the Commitment (substantially in the form of Annex IV hereto) to the Liquidity Provider (with a copy to America West) within two Business Days thereof. The failure by the Borrower to furnish any such notice shall not affect such automatic reduction of the Commitment. (b) Termination. Upon the making of any Downgrade Advance or Final Advance hereunder or the occurrence of the Termination Date, the obligation of the Liquidity Provider to make further Advances hereunder shall automatically and irrevocably terminate, and the Borrower shall not be entitled to request any further Borrowing hereunder. Section 2.5 Repayments of Interest Advances or the Final Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or to cause to be paid, to the Liquidity Provider on each date on which the Liquidity Provider shall make an Interest Advance or the Final Advance, an amount equal to (a) the amount of such Interest Advance or the Final Advance (any such Interest Advance or the Final Advance, until repaid, is referred to herein as an "Unpaid Advance"), plus (b) interest on the amount of each such Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9, unless otherwise waived by the Liquidity Provider, the Borrower shall be obligated, without notice of an Advance or demand for repayment from the Liquidity Provider (which notice and demand are hereby waived by the Borrower), to repay the Liquidity Provider for all Interest Advances and Final Advances on the same day as made and all Applied Downgrade Advances on the same day they became Applied Downgrade Advances. The Borrower and the Liquidity Provider agree that the repayment in full of each Interest Advance and the Final Advance on the date such Interest Advance or the Final Advance is made and each Applied Downgrade Advance on the date it becomes an Applied Downgrade Advance is intended to be a contemporaneous exchange for new value given to the Borrower by the Liquidity Provider. 8 12 Section 2.6 Repayments of Downgrade Advances. (a) Amounts advanced hereunder in respect of a Downgrade Advance shall be deposited in the Class B Cash Collateral Account, and invested and withdrawn from the Class B Cash Collateral Account, as set forth in Sections 3.6(c), (e) and (f) of the Intercreditor Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular Distribution Date, commencing on the first Regular Distribution Date after the making of a Downgrade Advance, interest on the principal amount of any such Downgrade Advance as provided in Section 3.7. Immediately upon the withdrawal of any amounts from the Class B Cash Collateral Account on account of a reduction in the Required Amount, the Borrower shall repay the Downgrade Advance in a principal amount equal to the amount of such reduction, plus interest on the principal amount repaid as provided in Section 3.7. (b) Upon the provision of a Replacement Liquidity Facility in replacement of this Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement, and prior to the effectiveness of any Replacement Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity Provider shall be repaid in full, whether from advances made by the Replacement Liquidity Provider, from amounts remaining on deposit in the Class B Cash Collateral Account after giving effect to any application of funds therefrom to any payment of interest on the Class B Certificates on the date of such replacement, or otherwise. Section 2.7 Payments to the Liquidity Provider Under the Intercreditor Agreement. In order to provide for payment or repayment to the Liquidity Provider of any amounts hereunder, the Intercreditor Agreement provides that amounts available and referred to in Articles II and III of the Intercreditor Agreement, to the extent payable to the Liquidity Provider pursuant to the terms of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the Liquidity Provider in accordance with the terms thereof. Amounts so paid to the Liquidity Provider shall be applied by the Liquidity Provider in the order of priority required by the applicable provisions of Articles II and III of the Intercreditor Agreement. Section 2.8 Book Entries. The Liquidity Provider shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower resulting from Advances made from time to time and the amounts of principal and interest payable hereunder and paid from time to time in respect thereof; provided, however, that the failure by the Liquidity Provider to maintain such account or accounts shall not affect the obligations of the Borrower in respect of Advances. 9 13 Section 2.9 Payments from Available Funds Only. All payments to be made by the Borrower under this Agreement shall be made only from amounts received by it that constitute Scheduled Payments or Special Payments and only to the extent that the Borrower shall have sufficient income or proceeds therefrom to enable the Borrower to make payments in accordance with the terms hereof after giving effect to the priority of payments provisions set forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will look solely to such amounts to the extent available for distribution to it as provided in the Intercreditor Agreement and this Agreement and that the Borrower, in its individual capacity, is not personally liable to it for any amounts payable or liability under this Agreement except as expressly provided in this Agreement, the Intercreditor Agreement or any Refunding Agreement. Amounts on deposit in the Class B Cash Collateral Account shall be available to make payments only to the extent and for the purposes expressly contemplated in Section 3.6(f) of the Intercreditor Agreement. ARTICLE III OBLIGATIONS OF THE BORROWER Section 3.1 Increased Costs. If the Liquidity Provider shall determine that (a) any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof or in the compliance by the Liquidity Provider (or its head office) with any applicable direction, request or requirement (whether or not having the force of law) of any central bank or competent governmental or other authority shall either (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans made by, the Liquidity Provider, or (ii) impose on the Liquidity Provider any other condition regarding this Agreement or any Advance, or (iii) change the basis of taxation of any amounts payable to the Liquidity Provider (other than Taxes imposed on the overall net or gross income of the Liquidity Provider) and (b) the result of any event referred to in the preceding clause (i), (ii) or (iii) shall be to increase the cost to the Liquidity Provider of issuing or maintaining its commitment or funding or maintaining Advances (which increase in cost shall be determined by the Liquidity Provider's reasonable allocations of the aggregate of such cost increases resulting from such event), then, no later than 30 days after demand by the Liquidity Provider, the Borrower shall pay, or cause to be paid, to the Liquidity Provider, from time to time as specified by the Liquidity Provider, additional amounts which shall be sufficient to compensate the Liquidity Provider for such increased cost. A certificate as to such increased cost incurred by the Liquidity Provider as a result of any event mentioned in clause (i), (ii) or (iii) above, prepared 10 14 in reasonable detail and submitted by the Liquidity Provider to the Borrower, shall be conclusive, absent manifest error, as to the amount thereof. The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.1 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. Section 3.2 Capital Adequacy. If the Liquidity Provider shall determine that the adoption after the date hereof of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change after the date hereof in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance after the date hereof by the Liquidity Provider (or its head office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, is generally applicable to all banks domiciled in Belgium with branches in the United States and not related to the financial condition of the Liquidity Provider and has the effect of reducing the rate of return on the Liquidity Provider's capital as a consequence of issuing or maintaining its commitment hereunder or its funding or maintaining Advances to a level below that which the Liquidity Provider could have achieved but for such adoption, change or compliance (taking into consideration the Liquidity Provider's policies with respect to capital adequacy) by an amount deemed by the Liquidity Provider to be material, then, no later than 30 days after demand by the Liquidity Provider, the Borrower shall pay to the Liquidity Provider, from time to time as specified by the Liquidity Provider, additional amounts which shall be sufficient to compensate the Liquidity Provider for such reduction in respect of issuing or maintaining its commitment hereunder or its funding or maintaining Advances. A certificate as to such additional amount describing the event which has the effect of reducing the rate of return on the Liquidity Provider's capital, prepared in reasonable detail and submitted by the Liquidity Provider to the Borrower, shall be conclusive, absent manifest error, as to the amount thereof. The Liquidity Provider further agrees that no amounts shall be payable under this Section 3.2 unless the Liquidity Provider is charging its other borrowers with whom it has agreements similar to this agreement the amounts that are payable to the Liquidity Provider under this Section 3.2. 11 15 The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.2 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. Section 3.3 Payments Free of Deductions. All payments made by the Borrower under this Agreement shall be made free and clear of, and without reduction for or on account of, any present or future stamp or other taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed, excluding any Taxes imposed on the overall net income of the Liquidity Provider and excluding United States federal income tax withholding to the extent such withholding is, or would be, actually imposed upon payments to the Liquidity Provider as of the date of this Agreement (such non-excluded taxes being referred to herein, collectively, as "Non-Excluded Taxes" and, individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required to be withheld from any amounts payable to the Liquidity Provider under this Agreement, the amounts so payable to the Liquidity Provider shall be increased to the extent necessary to yield to the Liquidity Provider (after payment of all Non-Excluded Taxes and taxes imposed on the receipt of such increase) interest or any other such amounts payable under this Agreement at the rates or in the amounts specified in this Agreement. Whenever any Non-Excluded Tax is payable by the Borrower, promptly thereafter the Borrower shall send the Liquidity Provider certified copies of tax receipts evidencing such payment by the Borrower. The Liquidity Provider agrees to provide to the Borrower on or prior to the Effective Date, and from time to time thereafter prior to the expiration of the effectiveness of and promptly upon the occurrence of any event requiring a change in the most recent form previously delivered by it (and prior to the immediately following due date of any payment by the Borrower hereunder), to the extent that the Liquidity Provider is legally entitled to do so, two original Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that the Liquidity Provider is completely exempt from United States withholding tax on payments pursuant to this Agreement. The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.3 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity 12 16 Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. Section 3.4 Payments. The Borrower shall make or cause to be made each payment to the Liquidity Provider under this Agreement so as to cause the same to be received by the Liquidity Provider not later than 1:00 P.M. (New York City time) on the day when due. The Borrower shall make all such payments in lawful money of the United States of America, to the Liquidity Provider in immediately available funds, by wire transfer to The Bank of New York, One Wall Street, New York, NY 10286, ABA No. 021-000-018, for the account of Kredietbank New York, Account No. 802-3015618 (referencing America West Airlines Liquidity Facility). Section 3.5 Computations. All computations of interest based on the Base Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and all computations of (x) interest based on the LIBOR Rate and (y) fees payable to the Liquidity Provider, shall be made on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Section 3.6 Payment on Non-Business Days. Whenever any payment to be made hereunder (other than a payment on LIBOR Advances) becomes due and payable on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and interest thereon shall be payable at the then applicable rate during such extension. If any payment on a LIBOR Advance becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. Section 3.7 Interest. (a) The Borrower shall pay, or shall cause to be paid, interest on (i) the unpaid principal amount of each Advance from and including the date of such Advance to but excluding the date such principal amount shall be paid in full and (ii) any other amount due hereunder (whether fees, commissions, expenses or other amounts or, to the extent permitted by law, installments of interest on Advances or any such other amount) which is not paid when due (whether at stated maturity, by acceleration or otherwise) from and including the due date thereof to but excluding the date such amount is paid in full, in each such case, at a fluctuating interest rate per annum for each day equal to the Applicable Liquidity Rate for such Advance for such day, but in no event at a rate per annum greater than the maximum rate permitted by applicable law; provided, however, that, if at any time the otherwise applicable interest 13 17 rate as set forth in this Section 3.7 shall exceed the maximum rate permitted by applicable law, then any subsequent reduction in such interest rate will not reduce the rate of interest payable pursuant to this Section 3.7 below the maximum rate permitted by applicable law until the total amount of interest accrued equals the amount of interest that would have accrued if such otherwise applicable interest rate as set forth in this Section 3.7 had at all times been in effect. Nothing contained in this Section 3.7 shall require the Borrower to pay any amount under this Section 3.7 other than to the extent the Borrower shall have funds available therefor. (b) Each Advance will be either a Base Rate Advance or a LIBOR Advance as provided in this Section. Each such Advance will be a Base Rate Advance for the period from the date of its borrowing to (but excluding) the third Business Day following the Liquidity Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance; provided that the Final Advance shall, until repaid in full, be a Base Rate Advance and the Borrower may not convert the Final Advance into a LIBOR Advance. (c) Each LIBOR Advance shall bear interest during each Interest Period at a per annum rate equal to the LIBOR Rate for such Interest Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on the last day of such Interest Period and, in the event of the payment of principal of such LIBOR Advance on a day other than such last day, on the date of such payment (to the extent of interest accrued on the amount of principal repaid). (d) Each Base Rate Advance shall bear interest at a per annum rate equal to the Base Rate plus the Applicable Margin for such Base Rate Advance, payable in arrears on each Regular Distribution Date and, in the event of the payment of principal of such Base Rate Advance on a day other than a Regular Distribution Date, on the date of such payment (to the extent of interest accrued on the amount of principal repaid). (e) Each amount not paid when due hereunder (whether fees, commissions, expenses or other amounts or, to the extent permitted by applicable law, installments of interest on Advances) shall bear interest at the Base Rate. (f) Each change in the Base Rate shall become effective immediately. Section 3.8 Replacement of Borrower. Subject to Section 5.2(b), from time to time, upon the effective date and time specified in a written and completed Notice of Replacement Borrower in substantially the form of Annex III attached hereto (a "Notice of Replacement Borrower") delivered to the Liquidity Provider by the 14 18 then Borrower, the successor Borrower designated therein shall be substituted for as the Borrower for all purposes hereunder. Section 3.9 Funding Loss Indemnification. The Borrower shall pay to the Liquidity Provider, upon the request of the Liquidity Provider, such amount or amounts as shall be sufficient (in the reasonable opinion of the Liquidity Provider) to compensate it for any loss, cost, or expense incurred as a result of: (a) Any payment or prepayment of a LIBOR Advance on a date other than the last day of the Interest Period for such Advance; or (b) Any failure by the Borrower to borrow a LIBOR Advance on the date for borrowing specified in the relevant notice under Section 2.2 or 3.7. Section 3.10 Illegality. Notwithstanding any other provision in this Agreement, if any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Liquidity Provider (or its Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for the Liquidity Provider (or its Lending Office) to maintain or fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity Provider, the outstanding principal amount of the LIBOR Advances shall be converted to Base Rate Advances (a) immediately upon demand of the Liquidity Provider, if such change or compliance with such request, in the judgment of the Liquidity Provider, requires immediate repayment; or (b) at the expiration of the last Interest Period to expire before the effective date of any such change or request. In the event any change of the nature described in the preceding sentence shall make it unlawful or impossible for the Liquidity Provider (or its Lending Office) to maintain or fund its Base Rate Advances, the Liquidity Provider shall have the right to cause a Replacement Liquidity Facility to be substituted for this Agreement, subject to (i) the satisfaction of the conditions precedent to the effectiveness of, and the other provisions regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the Intercreditor Agreement and (ii) such Replacement Liquidity Facility and Replacement Liquidity Provider being reasonably acceptable to America West. ARTICLE IV CONDITIONS PRECEDENT Section 4.1 Conditions Precedent to Effectiveness of Section 2.1. Section 2.1 of this Agreement shall become effective 15 19 on and as of the first date (the "Effective Date") on which the following conditions precedent have been satisfied or waived: (a) The Liquidity Provider shall have received on or before the Closing Date each of the following, each dated such date (except for those documents delivered pursuant to paragraphs (v) and (vii) of this Section 4.1(a)), and each in form and substance satisfactory to the Liquidity Provider: (i) This Agreement duly executed on behalf of the Borrower; (ii) The Intercreditor Agreement duly executed on behalf of each of the parties thereto; (iii) Counterparts (or certified copies thereof) of each of the Operative Agreements (other than this Agreement and the Intercreditor Agreement) which, when taken together, bear the signatures of all of the respective parties thereto and which are in full force and effect in accordance with their respective terms; (iv) A copy of the Prospectus and specimen copies of the Class B Certificates; (v) Evidence that, on the Effective Date, the Class A Certificates, the Class B Certificates, the Class C Certificates, the Class D Certificates and the Class E Certificates will receive long-term credit ratings from Moody's of not lower than A2, Baa2, Ba1, Ba3 and B1, respectively, and from Standard & Poor's of not lower than AA-, A-, BBB-, BB and B+, respectively; (vi) An executed or certified copy of each document, instrument, certificate and opinion delivered pursuant to the Class B Trust Agreement, the Intercreditor Agreement, the Refunding Agreements and the other Operative Agreements (together with, in the case of each such opinion (unless such opinion is addressed to the Liquidity Provider), other than the opinion of counsel for the Underwriters, a letter from the counsel rendering such opinion to the effect that the Liquidity Provider is entitled to rely on such opinion as if it were addressed to the Liquidity Provider); (vii) Evidence that there shall have been made and shall be in full force and effect, all filings, recordings and/or registrations, and there shall have been given or taken any notice or other similar action as may be reasonably necessary or, to the extent reasonably requested by the Liquidity Provider, 16 20 reasonably advisable, in order to establish, perfect, protect and preserve the right, title and interest, remedies, powers, privileges, liens and security interests of, or for the benefit of, the Trustees and the Liquidity Provider created by the Operative Agreements; (viii) Copies of the appraisals included in the Prospectus; (ix) A letter from America West agreeing to provide to the Liquidity Provider the periodic financial reports referred to in Section 8.04(a) of the Trust Agreements; and (x) Such other documents, instruments, opinions and approvals (and, if requested by the Liquidity Provider, certified duplicates or executed copies thereof) as the Liquidity Provider shall have reasonably requested. (b) The following statements shall be true and shall be deemed to have been represented by each party (other than clause (ii) below, which shall be deemed to have been represented only by America West) to the Refunding Agreements as being true on and as of the Effective Date: (i) The representations and warranties of such Person contained in each Refunding Agreement are true and correct on and as of the Effective Date as though made on and as of the Effective Date; and (ii) No event has occurred and is continuing, or would result from the entering into of this Agreement or the making of any Advance, which constitutes a Liquidity Event of Default. The Liquidity Provider shall have received payment in full of all fees and other sums required to be paid to or for the account of the Liquidity Provider on or prior to the Effective Date. (c) All conditions precedent to the issuance of the Certificates under the Trust Agreements shall have been satisfied, all conditions precedent to the effectiveness of the other Liquidity Facilities shall have been satisfied, and all conditions precedent to the purchase of the Certificates by the Underwriters under the Underwriting Agreement shall have been satisfied (except for any of such conditions precedent under the Underwriting Agreement that shall have been waived by the Underwriters). 17 21 (d) The Borrower shall have received a certificate, dated the date hereof, signed by a duly authorized representative of the Liquidity Provider, certifying that all conditions precedent to the effectiveness of Section 2.1 have been satisfied or waived (other than this Section 4.1(d)). Section 4.2 Conditions Precedent to Borrowing. The obligation of the Liquidity Provider to make an Advance on the occasion of each Borrowing shall be subject to the conditions precedent that the Effective Date shall have occurred and, except in the case of a Final Advance, prior to the date of such Borrowing, the Borrower shall have delivered a Notice of Borrowing which conforms to the terms and conditions of this Agreement and has been completed as may be required by the relevant form of the Notice of Borrowing for the type of Advance requested. ARTICLE V COVENANTS Section 5.1 Affirmative Covenants of the Borrower. So long as any Advance shall remain unpaid or the Liquidity Provider shall have any Commitment hereunder or the Borrower shall have any obligation to pay any amount to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity Provider shall otherwise consent in writing: (a) Performance of This and Other Agreements. Punctually pay or cause to be paid all amounts payable by it under this Agreement and the other Operative Agreements and observe and perform in all material respects the conditions, covenants and requirements applicable to it contained in this Agreement and the other Operative Agreements. (b) Reporting Requirements. Furnish to the Liquidity Provider with reasonable promptness, such information and data with respect to the transactions contemplated by the Operative Agreements as from time to time may be reasonably requested by the Liquidity Provider; and permit the Liquidity Provider, upon reasonable notice, to inspect the Borrower's books and records with respect to such transactions and to meet with officers and employees of the Borrower to discuss such transactions. Section 5.2 Negative Covenants of the Borrower. So long as any Advance shall remain unpaid or the Liquidity Provider shall have any Commitment hereunder or the Borrower shall have any obligation to pay any amount to the Liquidity Provider hereunder, the Borrower will not, without the written consent of the Liquidity Provider: 18 22 (a) Amendments. Modify, amend or supplement; or give any consent to any modification, amendment, or supplement; or make any waiver with respect to; any provision of the Trust Agreements or the Intercreditor Agreement, except for any supplemental agreement to the Trust Agreements provided for in Section 9.01 thereof. (b) Borrower. Appoint or permit or suffer to be appointed any successor Borrower without the prior written approval of the Liquidity Provider (which approval shall not be unreasonably withheld). ARTICLE VI FINAL ADVANCE Section 6.1 Final Advance. If (a) both (i) a Triggering Event shall have occurred and be continuing and (ii) a Performing Note Deficiency exists or (b) a Liquidity Event of Default shall have occurred and be continuing, the Liquidity Provider may, in its discretion, make a Final Advance whereupon (i) the Liquidity Provider shall have no further obligation to make Advances hereunder, (ii) all other outstanding Advances shall be automatically converted into Final Advances for purposes of determining the Applicable Liquidity Rate for interest payable thereon, and (iii) subject to Sections 2.7 and 2.9, all Advances, any accrued interest thereon and any other amounts outstanding hereunder shall become immediately due and payable to the Liquidity Provider. ARTICLE VII MISCELLANEOUS Section 7.1 Amendments, Etc. No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Liquidity Provider, and, in the case of an amendment, the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 7.2 Notices, Etc. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telecopier and mailed or delivered or sent by telecopier): Borrower: Fleet National Bank 777 Main Street Hartford, CT 06115 19 23 Attention: Corporate Trust Administration Telecopy: (860) 986-7920 Liquidity Provider: Kredietbank N.V. New York Branch 125 West 55th Street New York, NY 10019 Attention: General Manager Telecopy: (212) 956-5580 or, as to each of the foregoing, at such other address as shall be designated by such Person in a written notice to the others. All such notices and communications shall be effective (i) if given by telecopier, when transmitted to the telecopier number specified above, (ii) if given by mail, when deposited in the mails addressed as specified above, and (iii) if given by other means, when delivered at the address specified above, except that written notices to the Liquidity Provider pursuant to the provisions of Articles II and III hereof shall not be effective until received by the Liquidity Provider. A copy of all notices delivered hereunder to either party shall in addition be delivered to each of the parties to the Refunding Agreements at their respective addresses set forth therein. Section 7.3 No Waiver; Remedies. No failure on the part of the Liquidity Provider to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 7.4 Further Assurances. The Borrower agrees to do such further acts and things and to execute and deliver to the Liquidity Provider such additional assignments, agreements, powers and instruments as the Liquidity Provider may reasonably require or deem advisable to carry into effect the purposes of this Agreement and the other Operative Agreements or to better assure and confirm unto the Liquidity Provider its rights, powers and remedies hereunder and under the other Operative Agreements. Section 7.5 Indemnification; Survival of Certain Provisions. The Liquidity Provider shall be indemnified hereunder to the extent and in the manner described in Sections 10 and 13 of the Lease. In addition, the Borrower agrees to indemnify, protect, defend and hold harmless the Liquidity Provider from, against and in respect of, and shall pay on demand, all Expenses of any kind or nature whatsoever, whether arising before, on or after the date hereof, that may be imposed, 20 24 incurred by or asserted against any Liquidity Indemnitee, in any way relating to, resulting from, or arising out of or in connection with, this Agreement, the Intercreditor Agreement or the Refunding Agreements; provided, however, that the Borrower shall not be required to indemnify, protect, defend and hold harmless any Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee (i) to the extent such Expense is attributable to the gross negligence or willful misconduct of such Liquidity Indemnitee or any Related Indemnitee, (ii) that is ordinary and usual operating overhead expense or (iii) to the extent such Expense is attributable to the failure by such Liquidity Indemnitee or its Related Indemnitee to perform or observe any agreement, covenant or condition on its part to be performed or observed in any Operative Agreement. The indemnities contained in such Sections 10 and 13 of the Lease, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall survive the termination of this Agreement. Section 7.6 Liability of the Liquidity Provider. (a) Neither the Liquidity Provider nor any of its officers or directors shall be liable or responsible for: (i) the use which may be made of the Advances or any acts or omissions of the Borrower or any beneficiary or transferee in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; or (iii) the making of Advances by the Liquidity Provider against delivery of a Notice of Borrowing and other documents which do not comply with the terms hereof; provided, however, that the Borrower shall have a claim against the Liquidity Provider, and the Liquidity Provider shall be liable to the Borrower, to the extent of any damages suffered by the Borrower which were the result of (A) the Liquidity Provider's willful misconduct or negligence in determining whether documents presented hereunder comply with the terms hereof, or (B) any breach by the Liquidity Provider of any of the terms of this Agreement, including, but not limited to, the Liquidity Provider's failure to make lawful payment hereunder after the delivery to it by the Borrower of a Notice of Borrowing strictly complying with the terms and conditions hereof. (b) The Liquidity Provider shall not be liable or responsible in any respect for (i) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with this Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action, inaction or omission which may be taken by it in good faith, absent willful misconduct or negligence (in which event the extent of the Liquidity Provider's potential liability to the Borrower shall be limited as set forth in the immediately preceding paragraph), in connection with this Agreement or any Notice of Borrowing. 21 25 Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to pay, or cause to be paid (A) on the Effective Date and on such later date or dates on which the Liquidity Provider shall make demand, all reasonable out-of-pocket costs and expenses of the Liquidity Provider in connection with the preparation, negotiation, execution, delivery, filing and recording of this Agreement, any other Operative Agreement and any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees and expenses of outside counsel for the Liquidity Provider and (B) on demand, all reasonable costs and expenses of the Liquidity Provider (including reasonable counsel fees and expenses) in connection with (i) the enforcement of this Agreement or any other Operative Agreement, (ii) the modification or amendment of, or supplement to, this Agreement or any other Operative Agreement or such other documents which may be delivered in connection herewith or therewith (whether or not the same shall become effective) or (iii) any action or proceeding relating to any order, injunction, or other process or decree restraining or seeking to restrain the Liquidity Provider from paying any amount under this Agreement, the Intercreditor Agreement or any other Operative Document or otherwise affecting the application of funds in the Cash Collateral Accounts. In addition, the Borrower shall pay any and all recording, stamp and other similar taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, any other Operative Agreement and such other documents, and agrees to save the Liquidity Provider harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes or fees. Section 7.8 Binding Effect; Participations. (a) This Agreement shall be binding upon and inure to the benefit of the Borrower and the Liquidity Provider and their respective successors and assigns, except that neither the Liquidity Provider (except as otherwise provided in this Section 7.8) nor the Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the other party, subject to the requirement of Section 7.8(b). The Liquidity Provider may grant participations herein or in any of its rights or security hereunder and under the other Operative Agreements to such Persons as the Liquidity Provider may in its sole discretion select, subject to the requirement of Section 7.8(b). No such participation by the Liquidity Provider, however, will relieve the Liquidity Provider of its obligations hereunder. In connection with any participation or any proposed participation, the Liquidity Provider may disclose to the participant or the proposed participant any information that the Borrower is required to deliver or to disclose to the Liquidity Provider pursuant to this Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's source of funds may derive in part from its participants. Accordingly, references in 22 26 this Agreement and the other Operative Agreements to determinations, reserve and capital adequacy requirements, increased costs, reduced receipts and the like as they pertain to the Liquidity Provider shall be deemed also to include those of each of its participants (subject, in each case, to the maximum amount that would have been incurred by or attributable to the Liquidity Provider directly if the Liquidity Provider, rather than the participant, had held the interest participated). (b) If, pursuant to subsection (a) above, the Liquidity Provider sells any participation to any bank or other entity (each, a "Participant"), then, concurrently with the effectiveness of such participation, the Participant shall (i) represent to the Liquidity Provider (for the benefit of the Liquidity Provider and the Borrower) either (A) that it is incorporated under the laws of the United States or a state thereof or (B) that under applicable law and treaties, no taxes will be required to be withheld by the Borrower or the Liquidity Provider with respect to any payments to be made to such Participant in respect of this Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a statement that it is incorporated under the laws of the United States or a state thereof or (y) if it is not so incorporated, two copies of a properly completed United States Internal Revenue Service Form 4224 or Form 1001, as appropriate, or other applicable form, certificate or document prescribed by the Internal Revenue Service certifying, in each case, such Participant's entitlement to a complete exemption from United States federal withholding tax in respect to any and all payments to be made hereunder, and (iii) agree (for the benefit of the Liquidity Provider and the Borrower) to provide the Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date that any such form expires or becomes obsolete or (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it and prior to the immediately following due date of any payment by the Borrower hereunder, certifying in the case of a Form 1001 or Form 4224 that such Participant is entitled to a complete exemption from United States federal withholding tax on payments under this Agreement. Unless the Borrower has received forms or other documents reasonably satisfactory to it indicating that payments hereunder are not subject to United States federal withholding tax, the Borrower will withhold taxes as required by law from such payments at the applicable statutory rate without any obligation to gross-up or indemnify pursuant to Section 3.3. (c) Notwithstanding the other provisions of this Section 7.8, the Liquidity Provider may assign and pledge all or any portion of the Advances owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal 23 27 Reserve Bank, provided that any payment in respect of such assigned Advances made by the Borrower to the Liquidity Provider in accordance with the terms of this Agreement shall satisfy the Borrower's obligations hereunder in respect of such assigned Advance to the extent of such payment. No such assignment shall release the Liquidity Provider from its obligations hereunder. Section 7.9 Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial. (a) Each of the parties hereto hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement or any other Operative Agreement, or for recognition and enforcement of any judgment in respect hereof or thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) if such party does not maintain an office for the transaction of its business in New York, agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form and mail), postage prepaid, to each party hereto at its address set forth in Section 7.2, or at such other address of which the Liquidity Provider shall have been notified pursuant thereto; and 24 28 (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. (b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and all other common law and statutory claims. The Borrower and the Liquidity Provider each warrant and represent that it has reviewed this waiver with its legal counsel, and that it knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY. Section 7.12 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. Section 7.13 Entirety. This Agreement and the other Operative Agreements constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior understandings and agreements of such parties. Section 7.14 Headings; Section References. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Unless the context otherwise requires or otherwise indicated herein, all Section references in this Agreement are references to Sections hereof. Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. 25 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first set forth above. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: KREDIETBANK N.V., NEW YORK BRANCH, as Liquidity Provider By ________________________________ Name: Title: By ________________________________ Name: Title: 26 30 Annex I to Irrevocable Revolving Credit Agreement INTEREST ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned borrower (the "Borrower"), hereby certifies to KREDIETBANK N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class B Certificates dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of an Interest Advance by the Liquidity Provider to be used for the payment of interest on the Class B Certificates which was payable on the Distribution Date falling on _____________ in accordance with the terms and provisions of the Class B Trust Agreement and the Class B Certificates and has not been paid pursuant to clause fifth of Section 3.2 of the Intercreditor Agreement or clause seventh of Section 3.3 of the Intercreditor Agreement, which Advance is requested to be made on _____________. (3) The amount of the Interest Advance requested hereby (i) is $ , to be applied in respect of the payment of interest which was due and payable on the Class B Certificates on such Distribution Date, (ii) does not include any amount with respect to the payment of principal of, or premium on, the Class A Certificates, the Class B Certificates, the Class C Certificates, the Class D Certificates or Class E Certificates, or interest on the Class A Certificates, the Class C Certificates, the Class D Certificates or the Class E Certificates, (iii) was computed in accordance with the provisions of the Class B Certificates, the Class B Trust Agreement and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), (iv) does not exceed the Available Commitment on the date hereof, and (v) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will apply the same in accordance with the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the case may be, (b) no portion of such amount shall be applied by the Borrower for any other purpose and (c) no portion of such amount until so 31 applied shall be commingled with other funds held by the Borrower. (5) The Borrower hereby requests that the Advance requested hereby be a Base Rate Advance and that such Base Rate Advance be converted into a LIBOR Rate Advance on the third Business Day following your receipt of this notice. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, the making of the Interest Advance as requested by this Notice of Borrowing shall automatically reduce, subject to reinstatement in accordance with the terms of the Liquidity Agreement, the Available Commitment by an amount equal to the amount of the Interest Advance requested to be made hereby as set forth in clause (i) of paragraph (3) of this Certificate and such reduction shall automatically result in corresponding reductions in the amounts available to be borrowed pursuant to a subsequent Advance. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _ day of ______________, ______. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 2 32 SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING [Insert Copy of Computations in accordance with Interest Advance Notice of Borrowing] 3 33 Annex II to Irrevocable Revolving Credit Agreement DOWNGRADE ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned subordination agent (the "Borrower"), hereby certifies to KREDIETBANK, N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class B Certificates dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of the Downgrade Advance by the Liquidity Provider to be used for the funding of the Class B Cash Collateral Account in accordance with Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading of the debt rating of the Liquidity Provider issued by either Rating Agency below the applicable Threshold Rating, which Advance is requested to be made on _____________. (3) The amount of the Downgrade Advance requested hereby (i) is $___________, which equals the Available Commitment on the date hereof and is to be applied in respect of the funding of the Class B Cash Collateral Account in accordance with Section 3.6(c) of the Intercreditor Agreement, (ii) does not include any amount with respect to the payment of the principal of, or premium on, the Class B Certificates, or principal of, or interest or premium on, the Class A Certificates, the Class C Certificates, the Class D Certificates or the Class E Certificates, (iii) was computed in accordance with the provisions of the Class B Certificates, the Class B Trust Agreement and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), and (iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing under the Liquidity Agreement. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will deposit such amount in the Class B Cash Collateral Account and apply the same in accordance with the terms of Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such amount shall be applied by the Borrower for any other purpose and (c) no portion of such amount until so applied shall be commingled with other funds held by the Borrower. 34 (5) The Borrower hereby requests that the Advance requested hereby be a Base Rate Advance and that such Base Rate Advance be converted into a LIBOR Rate Advance on the third Business Day following your receipt of this notice. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of the Downgrade Advance as requested by this Notice of Borrowing shall automatically and irrevocably terminate the obligation of the Liquidity Provider to make further Advances under the Liquidity Agreement; and (B) following the making by the Liquidity Provider of the Downgrade Advance requested by this Notice of Borrowing, the Borrower shall not be entitled to request any further Advances under the Liquidity Agreement. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _ day of __________, _____. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 2 35 SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING [Insert Copy of computations in accordance with Downgrade Advance Notice of Borrowing] 36 Annex III to Irrevocable Revolving Credit Agreement NOTICE OF REPLACEMENT BORROWER [Date] Ladies and Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: [Name of Transferee] [Address of Transferee] all rights of the undersigned as Borrower under the Liquidity Agreement referred to above. The transferee has succeeded the undersigned as Subordination Agent under the Intercreditor Agreement referred to in the first paragraph of the Liquidity Agreement. By this transfer, all rights of the undersigned as Borrower under the Liquidity Agreement are transferred to the transferee and the transferee shall hereafter have the sole rights as Borrower thereunder. The undersigned shall pay any costs and expenses of such transfer, including, but not limited to, transfer taxes or governmental charges. We ask that this transfer be effective as of __________, ______. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 37 Annex IV to Irrevocable Revolving Credit Agreement NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT [Date] Ladies and Gentlemen: The undersigned, a duly authorized signatory of the undersigned subordination agent (the "Borrower"), hereby notifies Kredietbank N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that, pursuant to Section 2.4(a) of the Liquidity Agreement, the Commitment has been automatically reduced to $_________. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _ day of __________, _____. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By _______________________________ Name: Title: 2 EX-4.9 10 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS C 1 EXHIBIT 4.9 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS C CERTIFICATES Dated as of November 26, 1996 between FLEET NATIONAL BANK, as Subordination Agent, as agent and trustee for the America West Airlines Pass Through Trust 1996-1C, as Borrower and KREDIETBANK N.V., NEW YORK BRANCH, as Liquidity Provider Relating to America West Airlines Pass Through Trust 1996-1C 6.86% America West Airlines Pass Through Certificates, Series 1996-1C 2 TABLE OF CONTENTS
Page ARTICLE I............................................... 1 DEFINITIONS................................................. 1 Section 1.1 Certain Defined Terms....................................... 1 ARTICLE II.............................................. 5 AMOUNT AND TERMS OF THE COMMITMENT.......................... 5 Section 2.1 The Advances................................................ 5 Section 2.2 Making the Advances......................................... 6 Section 2.3 Fees........................................................ 7 Section 2.4 Reduction or Termination of the Commitment.................. 8 Section 2.5 Repayments of Interest Advances or the Final Advance........ 8 Section 2.6 Repayments of Downgrade Advances............................ 8 Section 2.7 Payments to the Liquidity Provider Under the Intercreditor Agreement..................................... 9 Section 2.8 Book Entries................................................ 9 Section 2.9 Payments from Available Funds Only.......................... 9 ARTICLE III OBLIGATIONS OF THE BORROWER................................. 10 Section 3.1 Increased Costs............................................. 10 Section 3.2 Capital Adequacy............................................ 11 Section 3.3 Payments Free of Deductions................................. 11 Section 3.4 Payments.................................................... 12 Section 3.5 Computations................................................ 13 Section 3.6 Payment on Non-Business Days................................ 13 Section 3.7 Interest.................................................... 13 Section 3.8 Replacement of Borrower..................................... 14 Section 3.9 Funding Loss Indemnification................................ 14 Section 3.10 Illegality................................................. 15 ARTICLE IV CONDITIONS PRECEDENT........................................ 15 Section 4.1 Conditions Precedent to Effectiveness of Section 2.1........ 15 Section 4.2 Conditions Precedent to Borrowing........................... 17 ARTICLE V COVENANTS .................................................. 18 Section 5.1 Affirmative Covenants of the Borrower....................... 18 Section 5.2 Negative Covenants of the Borrower.......................... 18
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Page ARTICLE VI FINAL ADVANCE.............................................. 19 Section 6.1 Final Advance.............................................. 19 ARTICLE VII MISCELLANEOUS ............................................. 19 Section 7.1 Amendments, Etc............................................ 19 Section 7.2 Notices, Etc............................................... 19 Section 7.3 No Waiver; Remedies........................................ 20 Section 7.4 Further Assurances......................................... 20 Section 7.5 Indemnification; Survival of Certain ...................... 20 Section 7.6 Liability of the Liquidity Provider........................ 21 Section 7.7 Costs, Expenses and Taxes.................................. 21 Section 7.8 Binding Effect; Participations............................. 22 Section 7.9 Severability............................................... 24 Section 7.10 GOVERNING LAW............................................. 24 Section 7.11 Submission to Jurisdiction; Waiver of Trial............... 24 Section 7.12 Execution in Counterparts................................. 25 Section 7.13 Entirety.................................................. 25 Section 7.14 Headings; Section References.............................. 25 Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE .................. 25
Annex I - Interest Advance Notice of Borrowing Annex II - Downgrade Advance Notice of Borrowing Annex III - Notice of Replacement Borrower Annex IV - Notice of Automatic Reduction of Commitment ii 4 IRREVOCABLE REVOLVING CREDIT AGREEMENT CLASS C CERTIFICATES IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS C CERTIFICATES dated as of November 26, 1996 between FLEET NATIONAL BANK, a national banking association, not in its individual capacity but solely as Subordination Agent under the Intercreditor Agreement (each as defined below), as agent and trustee for the Class C Trust (as defined below) (the "Borrower"), and KREDIETBANK N.V., acting through its New York Branch (the "Liquidity Provider"). W I T N E S S E T H WHEREAS, pursuant to the Class C Trust Agreement (such term and all other capitalized terms used in these recitals having the meanings set forth or referred to in Section 1.1), the Class C Trust is issuing the Class C Certificates; and WHEREAS, the Borrower, in order to support the timely payment of a portion of the interest on the Class C Certificates in accordance with their terms, has requested the Liquidity Provider to enter into this Agreement, providing in part for the Borrower to request in specified circumstances that advances be made hereunder. NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1 Certain Defined Terms. (a) Definitions. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise, the following capitalized terms shall have the following respective meanings for all purposes of this Agreement: "Advance" means an Interest Advance, a Final Advance or a Downgrade Advance, as the case may be. "Applicable Liquidity Rate" means the rates of interest specified in Section 3.7 with respect to any Advance. "Applicable Margin" means (x) with respect to any Downgrade Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per annum and (y) with respect to any other Advance including an Applied Downgrade Advance 1.5% (150 basis points) per annum. "Applied Downgrade Advance" means any amount in respect of a Downgrade Advance withdrawn from the Class C Cash Collateral Account for the purpose of paying interest on the Class C 5 Certificates in accordance with Section 3.6(f) of the Intercreditor Agreement. "Available Commitment" means, at any time of determination, an amount equal to (i) the Commitment at such time less (ii) subject to the proviso contained in the third sentence of Section 2.2(a), the aggregate amount of each Advance outstanding at such time; provided that following a Downgrade Advance or a Final Advance, the Available Commitment shall be zero. "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of (i) the base commercial lending rate announced from time to time by the Liquidity Provider, or (ii) the rate quoted by the Liquidity Provider, at approximately 11:00 A.M., New York City time, to dealers in the New York Federal funds market for overnight offering of dollars by the Liquidity Provider, for deposit plus .50 of 1 percent (.50%). "Base Rate Advance" means an Advance that bears interest at a rate based upon the Base Rate. "Borrower" has the meaning assigned to such term in the recital of parties to this Agreement. "Borrowing" means the making of Advances requested by delivery of a Notice of Borrowing or pursuant to Section 6.1. "Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in New York, New York or Hartford, Connecticut, and, if the applicable Business Day relates to any Advance or other amount bearing interest based on the LIBOR Rate, on which dealings are carried on in the London interbank market. "Commitment" means, initially, $3,884,166.30 as the same may be reduced from time to time in accordance with Section 2.4(a). "Downgrade Advance" means an Advance made pursuant to Section 2.2(b). "Effective Date" has the meaning specified in Section 4.1. The delivery of the certificate of the Liquidity Provider contemplated by Section 4.1(d) shall be conclusive evidence that the Effective Date has occurred. "Expenses" means liabilities, obligations, damages, settlements, penalties, claims, actions, suits, costs, expenses and disbursements (including, without limitation, reasonable fees and disbursements of legal counsel and costs of investigation), provided that Expenses shall not include any Taxes. 2 6 "Expiry Date" means January 17, 2006. "Final Advance" means an Advance made pursuant to Sections 2.2(c) and 6.1. "Intercreditor Agreement" means the Intercreditor Agreement dated the date hereof, among the Trustees, the Liquidity Provider, the liquidity provider under each Liquidity Facility (other than this Agreement) and the Subordination Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Interest Advance" means an Advance made pursuant to Section 2.2(a). "Interest Period" means, with respect to any LIBOR Advance, each of the following periods: (i) the period beginning on the date such LIBOR Advance is made (or is converted from a Base Rate Advance) and ending on the next Regular Distribution Date; and (ii) each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the next Regular Distribution Date. "Lending Office" means the lending office of the Liquidity Provider, presently located at 125 West 55th Street, New York, NY 10019, or such other lending office as the Liquidity Provider from time to time shall notify the Borrower at its lending office hereunder. "LIBOR Advance" means an Advance bearing interest at a rate based upon the LIBOR Rate. "LIBOR Rate" means, with respect to any Interest Period, the rate per annum at which deposits in U.S. Dollars are offered for the relevant Interest Period by the Liquidity Provider to prime banks in the London interbank market at approximately 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in the principal amount of the Advance to which such Interest Period is to apply and for a period of time comparable to such Interest Period, as quoted by the Liquidity Provider to the Subordination Agent. "Liquidity Event of Default" means the occurrence of the following: all of the Equipment Notes shall have been either declared to be immediately due and payable or shall not have been paid at their final maturity. A Liquidity Event of Default shall not occur upon an automatic acceleration of the Equipment Notes as a result of an America West Bankruptcy Event. 3 7 "Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) each affiliate of the Liquidity Provider, (iii) the respective directors, officers, employees, agents and servants of the Liquidity Provider and its affiliates, and (iv) the successors and permitted assigns of the persons described in clauses (i) through (iii), inclusive. "Liquidity Provider" has the meaning assigned to such term in the recital of parties to this Agreement. "Non-Excluded Tax" has the meaning specified in Section 3.3. "Notice of Borrowing" has the meaning specified in Section 2.2(d). "Notice of Replacement Borrower" has the meaning specified in Section 3.8. "Participant" has the meaning assigned to such term in Section 7.8(b). "Prospectus" means the prospectus included in the registration statement on Form S-3 (File No. 333-14691) filed by America West relating to certain pass through certificates, as such Prospectus may be amended or supplemented. "Related Indemnitee" means, with respect to any Liquidity Indemnitee, its director, officer, employee, agent, affiliate or employer. "Replenishment Amount" has the meaning assigned to such term in Section 2.6(b). "Required Amount" means, for any day, the sum of the aggregate amount of interest, calculated at the rate per annum equal to the Stated Interest Rate for the Class C Certificates, that would be payable on the Class C Certificates on each of the three successive semiannual Regular Distribution Dates immediately following such day or, if such day is a Regular Distribution Date, on such day and the succeeding two semiannual Regular Distribution Dates, in each case calculated on the basis of the Pool Balance of the Class C Certificates on such day and without regard to expected future payments of principal on the Class C Certificates. "Termination Date" means the earliest to occur of the following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to the Liquidity Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that all of the Class C Certificates have been paid in full (or provision has been made for such payment in accordance with the Intercreditor 4 8 Agreement and the Trust Agreements) or are otherwise no longer entitled to the benefits of this Agreement; (iii) the date on which the Borrower delivers to the Liquidity Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that a Replacement Liquidity Facility has been substituted for this Agreement in full pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date on which the Liquidity Provider makes the Final Advance; and (v) the date on which no Advance is or may (including by reason of reinstatement as herein provided) become available for a Borrowing hereunder. "Unpaid Advance" has the meaning assigned to such term in Section 2.5. (b) Terms Defined in the Intercreditor Agreement. For all purposes of this Agreement, the following terms shall have the respective meanings assigned to such terms in the Intercreditor Agreement: "America West", "America West Bankruptcy Event", "Certificates", "Class A Certificates", "Class B Certificates", "Class C Certificates", "Class C Certificateholders", "Class C Cash Collateral Account", "Class C Trust", "Class C Trust Agreement", "Class C Trustee", "Class D Certificates", "Class E Certificates", "Closing Date", "Controlling Party", "Corporate Trust Office", "Distribution Date", "$", "Equipment Notes", "Indenture", "Investment Earnings", "Liquidity Facility", "Moody's", "Operative Agreements", "Performing Equipment Note", "Performing Note Deficiency", "Person", "Pool Balance", "Rating Agency", "Refunding Agreement", "Regular Distribution Date", "Replacement Liquidity Facility", "Responsible Officer", "Scheduled Payment", "Special Payment", "Standard & Poor's", "Stated Interest Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Triggering Event", "Trust", "Trust Agreements", "Trustee", "Underwriters", "Underwriting Agreement", and "Written Notice". ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT Section 2.1 The Advances. The Liquidity Provider hereby irrevocably agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless the obligations of the Liquidity Provider shall be earlier terminated in accordance with the terms of Section 2.4(b)) in an aggregate amount at any time outstanding not to exceed the Commitment. 5 9 Section 2.2 Making the Advances. (a) Interest Advances shall be made in one or more Borrowings by delivery to the Liquidity Provider of one or more written and completed Notices of Borrowing in substantially the form of Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an amount not exceeding the Available Commitment at such time and shall be used solely for the payment when due of interest on the Class C Certificates at the Stated Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor Agreement. Each Interest Advance made hereunder shall automatically reduce the Available Commitment and the amount available to be borrowed hereunder by subsequent Advances by the amount of such Interest Advance (subject to reinstatement as provided in the next sentence). Upon repayment to the Liquidity Provider in full of the amount of any Interest Advance made pursuant to this Section 2.2(a), together with accrued interest thereon (as provided herein), the Available Commitment shall be reinstated by the amount of such repaid Interest Advance; provided, however, that the Available Commitment shall not be so reinstated at any time if (x) both (i) a Triggering Event shall have occurred and be continuing and (ii) a Performing Note Deficiency exists or (y) a Liquidity Event of Default shall have occurred and be continuing. (b) A Downgrade Advance shall be made in a single Borrowing upon a downgrading of the rating of the Liquidity Provider resulting in the Liquidity Provider's ratings not meeting the Threshold Rating (as provided for in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity Facility shall have been delivered to the Borrower in accordance with said Section 3.6(c), by delivery to the Liquidity Provider of a written and completed Notice of Borrowing in substantially the form of Annex II attached hereto, signed by a Responsible Officer of the Borrower, in an amount not exceeding the Available Commitment at such time, and shall be used to fund the Class C Cash Collateral Account in accordance with said Section 3.6(c). The Liquidity Provider shall promptly notify the Borrower of any downgrade of its unsecured debt rating by Moody's or Standard & Poor's below the applicable Threshold Rating. (c) A Final Advance shall be made by the Liquidity Provider without the necessity for a Notice of Borrowing at the option of the Liquidity Provider on the occurrence of an event described in Section 6.1(a) or 6.1(b) in an amount equal to the Available Commitment at such time, and shall be used to fund the Class C Cash Collateral Account. (d) Each Borrowing (other than under Section 2.2(c)) shall be made on notice in writing (a "Notice of Borrowing") in substantially the form required by Section 2.2(a) or 2.2(b), as the case may be, given not later than 12:00 Noon (New York City time) on the Business Day prior to the day of the proposed Borrowing by the Borrower to the Liquidity Provider. Upon 6 10 satisfaction of the conditions precedent set forth in Section 4.2 with respect to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New York City time) on the date of such Borrowing or on such later Business Day specified by the Borrower in such Notice of Borrowing, make available to the Borrower, in U.S. dollars and in immediately available funds, the amount of such Borrowing to be paid to the Borrower in accordance with its payment instructions. If a Notice of Borrowing is delivered by the Borrower in respect of any Borrowing after 12:00 Noon (New York City time) on a Business Day, the Liquidity Provider shall, before 12:00 Noon (New York City time) on the second Business Day next following the day of receipt of such Notice of Borrowing or on such later Business Day specified by the Borrower in such Notice of Borrowing, make available to the Borrower, in U.S. dollars and in immediately available funds, the amount of such Borrowing to be paid to the Borrower in accordance with its payment instructions. Payments of proceeds of a Borrowing shall be made by wire transfer of immediately available funds to the Borrower in accordance with such wire transfer instructions as the Borrower shall furnish from time to time to the Liquidity Provider for such purpose. Each Notice of Borrowing shall be irrevocable and binding on the Borrower. (e) Upon the making of any Advance requested pursuant to a Notice of Borrowing, in accordance with the Borrower's payment instructions, the Liquidity Provider shall be fully discharged of its obligation hereunder with respect to such Notice of Borrowing, and the Liquidity Provider shall not thereafter be obligated to make any further Advances hereunder in respect of such Notice of Borrowing to the Borrower or to any other person (including the holder of any Class C Certificate or the Class C Trustee) who makes to the Class C Trustee or the Borrower a demand for payment with respect to any Class C Certificate. By paying to the Borrower proceeds of Advances requested by the Borrower in accordance with the provisions of this Agreement, the Liquidity Provider makes no representation as to, and assumes no responsibility for, the correctness or sufficiency for any purpose of the amount of the Advances so made and requested. Section 2.3 Fees. (a) The Borrower agrees to pay to the Liquidity Provider a fee equal to 0.25% of the Commitment (as in effect on the Effective Date). Such fee shall be payable on the Effective Date. (b) The Borrower shall pay, or shall cause to be paid, to the Liquidity Provider, a fee equal to 0.40% per annum on the average Available Commitment from the Effective Date to the earlier of the date on which a Downgrade Advance is made and the Termination Date. Such fee shall be payable in arrears on each Regular Distribution Date. Nothing contained in this Section 2.3 shall require the Borrower to pay any amount under this Section 7 11 2.3 other than to the extent the Borrower shall have funds available therefor. Section 2.4 Reduction or Termination of the Commitment. (a) Automatic Reductions. Promptly following each date on which the Required Amount is reduced as a result of a reduction in the Pool Balance of the Class C Certificates or otherwise, the Commitment shall automatically be reduced to an amount equal to such reduced Required Amount (as calculated by the Borrower). The Borrower shall give notice of any such automatic reduction of the Commitment (substantially in the form of Annex IV hereto) to the Liquidity Provider (with a copy to America West) within two Business Days thereof. The failure by the Borrower to furnish any such notice shall not affect such automatic reduction of the Commitment. (b) Termination. Upon the making of any Downgrade Advance or Final Advance hereunder or the occurrence of the Termination Date, the obligation of the Liquidity Provider to make further Advances hereunder shall automatically and irrevocably terminate, and the Borrower shall not be entitled to request any further Borrowing hereunder. Section 2.5 Repayments of Interest Advances or the Final Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or to cause to be paid, to the Liquidity Provider on each date on which the Liquidity Provider shall make an Interest Advance or the Final Advance, an amount equal to (a) the amount of such Interest Advance or the Final Advance (any such Interest Advance or the Final Advance, until repaid, is referred to herein as an "Unpaid Advance"), plus (b) interest on the amount of each such Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9, unless otherwise waived by the Liquidity Provider, the Borrower shall be obligated, without notice of an Advance or demand for repayment from the Liquidity Provider (which notice and demand are hereby waived by the Borrower), to repay the Liquidity Provider for all Interest Advances and Final Advances on the same day as made and all Applied Downgrade Advances on the same day they became Applied Downgrade Advances. The Borrower and the Liquidity Provider agree that the repayment in full of each Interest Advance and the Final Advance on the date such Interest Advance or the Final Advance is made and each Applied Downgrade Advance on the date it becomes an Applied Downgrade Advance is intended to be a contemporaneous exchange for new value given to the Borrower by the Liquidity Provider. Section 2.6 Repayments of Downgrade Advances. (a) Amounts advanced hereunder in respect of a Downgrade Advance shall be deposited in the Class C Cash Collateral Account, and invested and withdrawn from the Class C Cash Collateral Account, as set forth in Sections 3.6(c), (e) and (f) of the Intercreditor 8 12 Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular Distribution Date, commencing on the first Regular Distribution Date after the making of a Downgrade Advance, interest on the principal amount of any such Downgrade Advance as provided in Section 3.7. Immediately upon the withdrawal of any amounts from the Class C Cash Collateral Account on account of a reduction in the Required Amount, the Borrower shall repay the Downgrade Advance in a principal amount equal to the amount of such reduction, plus interest on the principal amount repaid as provided in Section 3.7. (b) Upon the provision of a Replacement Liquidity Facility in replacement of this Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement, and prior to the effectiveness of any Replacement Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity Provider shall be repaid in full, whether from advances made by the Replacement Liquidity Provider, from amounts remaining on deposit in the Class C Cash Collateral Account after giving effect to any application of funds therefrom to any payment of interest on the Class C Certificates on the date of such replacement, or otherwise. Section 2.7 Payments to the Liquidity Provider Under the Intercreditor Agreement. In order to provide for payment or repayment to the Liquidity Provider of any amounts hereunder, the Intercreditor Agreement provides that amounts available and referred to in Articles II and III of the Intercreditor Agreement, to the extent payable to the Liquidity Provider pursuant to the terms of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the Liquidity Provider in accordance with the terms thereof. Amounts so paid to the Liquidity Provider shall be applied by the Liquidity Provider in the order of priority required by the applicable provisions of Articles II and III of the Intercreditor Agreement. Section 2.8 Book Entries. The Liquidity Provider shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower resulting from Advances made from time to time and the amounts of principal and interest payable hereunder and paid from time to time in respect thereof; provided, however, that the failure by the Liquidity Provider to maintain such account or accounts shall not affect the obligations of the Borrower in respect of Advances. Section 2.9 Payments from Available Funds Only. All payments to be made by the Borrower under this Agreement shall be made only from amounts received by it that constitute Scheduled Payments or Special Payments and only to the extent that the Borrower shall have sufficient income or proceeds therefrom to enable the Borrower to make payments in accordance with the terms 9 13 hereof after giving effect to the priority of payments provisions set forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will look solely to such amounts to the extent available for distribution to it as provided in the Intercreditor Agreement and this Agreement and that the Borrower, in its individual capacity, is not personally liable to it for any amounts payable or liability under this Agreement except as expressly provided in this Agreement, the Intercreditor Agreement or any Refunding Agreement. Amounts on deposit in the Class C Cash Collateral Account shall be available to make payments only to the extent and for the purposes expressly contemplated in Section 3.6(f) of the Intercreditor Agreement. ARTICLE III OBLIGATIONS OF THE BORROWER Section 3.1 Increased Costs. If the Liquidity Provider shall determine that (a) any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof or in the compliance by the Liquidity Provider (or its head office) with any applicable direction, request or requirement (whether or not having the force of law) of any central bank or competent governmental or other authority shall either (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans made by, the Liquidity Provider, or (ii) impose on the Liquidity Provider any other condition regarding this Agreement or any Advance, or (iii) change the basis of taxation of any amounts payable to the Liquidity Provider (other than Taxes imposed on the overall net or gross income of the Liquidity Provider) and (b) the result of any event referred to in the preceding clause (i), (ii) or (iii) shall be to increase the cost to the Liquidity Provider of issuing or maintaining its commitment or funding or maintaining Advances (which increase in cost shall be determined by the Liquidity Provider's reasonable allocations of the aggregate of such cost increases resulting from such event), then, no later than 30 days after demand by the Liquidity Provider, the Borrower shall pay, or cause to be paid, to the Liquidity Provider, from time to time as specified by the Liquidity Provider, additional amounts which shall be sufficient to compensate the Liquidity Provider for such increased cost. A certificate as to such increased cost incurred by the Liquidity Provider as a result of any event mentioned in clause (i), (ii) or (iii) above, prepared in reasonable detail and submitted by the Liquidity Provider to the Borrower, shall be conclusive, absent manifest error, as to the amount thereof. The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory 10 14 restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.1 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. Section 3.2 Capital Adequacy. If the Liquidity Provider shall determine that the adoption after the date hereof of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change after the date hereof in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance after the date hereof by the Liquidity Provider (or its head office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, is generally applicable to all banks domiciled in Belgium with branches in the United States and not related to the financial condition of the Liquidity Provider and has the effect of reducing the rate of return on the Liquidity Provider's capital as a consequence of issuing or maintaining its commitment hereunder or its funding or maintaining Advances to a level below that which the Liquidity Provider could have achieved but for such adoption, change or compliance (taking into consideration the Liquidity Provider's policies with respect to capital adequacy) by an amount deemed by the Liquidity Provider to be material, then, no later than 30 days after demand by the Liquidity Provider, the Borrower shall pay to the Liquidity Provider, from time to time as specified by the Liquidity Provider, additional amounts which shall be sufficient to compensate the Liquidity Provider for such reduction in respect of issuing or maintaining its commitment hereunder or its funding or maintaining Advances. A certificate as to such additional amount describing the event which has the effect of reducing the rate of return on the Liquidity Provider's capital, prepared in reasonable detail and submitted by the Liquidity Provider to the Borrower, shall be conclusive, absent manifest error, as to the amount thereof. The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.2 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. The Liquidity Provider further agrees that no amounts shall be payable under this Section 3.2 unless the Liquidity Provider is charging its other borrowers with whom it has agreements similar to this agreement the amounts that are payable to the Liquidity Provider under this Section 3.2. 11 15 Section 3.3 Payments Free of Deductions. All payments made by the Borrower under this Agreement shall be made free and clear of, and without reduction for or on account of, any present or future stamp or other taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed, excluding any Taxes imposed on the overall net income of the Liquidity Provider and excluding United States federal income tax withholding to the extent such withholding is, or would be, actually imposed upon payments to the Liquidity Provider as of the date of this Agreement (such non-excluded taxes being referred to herein, collectively, as "Non-Excluded Taxes" and, individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required to be withheld from any amounts payable to the Liquidity Provider under this Agreement, the amounts so payable to the Liquidity Provider shall be increased to the extent necessary to yield to the Liquidity Provider (after payment of all Non-Excluded Taxes and taxes imposed on the receipt of such increase) interest or any other such amounts payable under this Agreement at the rates or in the amounts specified in this Agreement. Whenever any Non-Excluded Tax is payable by the Borrower, promptly thereafter the Borrower shall send the Liquidity Provider certified copies of tax receipts evidencing such payment by the Borrower. The Liquidity Provider agrees to provide to the Borrower on or prior to the Effective Date, and from time to time thereafter prior to the expiration of the effectiveness of and promptly upon the occurrence of any event requiring a change in the most recent form previously delivered by it (and prior to the immediately following due date of any payment by the Borrower hereunder), to the extent that the Liquidity Provider is legally entitled to do so, two original Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that the Liquidity Provider is completely exempt from United States withholding tax on payments pursuant to this Agreement. The Liquidity Provider agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any amount payable under this Section 3.3 that may thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in any material respect to the Liquidity Provider. Section 3.4 Payments. The Borrower shall make or cause to be made each payment to the Liquidity Provider under this Agreement so as to cause the same to be received by the Liquidity Provider not later than 1:00 P.M. (New York City time) on the day when due. The Borrower shall make all such payments in lawful money of the United States of America, to the Liquidity 12 16 Provider in immediately available funds, by wire transfer to The Bank of New York, One Wall Street, New York, NY 10286, ABA No. 021-000-018, for the account of Kredietbank New York, Account No. 802-3015618 (referencing America West Airlines Liquidity Facility). Section 3.5 Computations. All computations of interest based on the Base Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and all computations of (x) interest based on the LIBOR Rate and (y) fees payable to the Liquidity Provider, shall be made on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Section 3.6 Payment on Non-Business Days. Whenever any payment to be made hereunder (other than a payment on LIBOR Advances) becomes due and payable on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and interest thereon shall be payable at the then applicable rate during such extension. If any payment on a LIBOR Advance becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. Section 3.7 Interest. (a) The Borrower shall pay, or shall cause to be paid, interest on (i) the unpaid principal amount of each Advance from and including the date of such Advance to but excluding the date such principal amount shall be paid in full and (ii) any other amount due hereunder (whether fees, commissions, expenses or other amounts or, to the extent permitted by law, installments of interest on Advances or any such other amount) which is not paid when due (whether at stated maturity, by acceleration or otherwise) from and including the due date thereof to but excluding the date such amount is paid in full, in each such case, at a fluctuating interest rate per annum for each day equal to the Applicable Liquidity Rate for such Advance for such day, but in no event at a rate per annum greater than the maximum rate permitted by applicable law; provided, however, that, if at any time the otherwise applicable interest rate as set forth in this Section 3.7 shall exceed the maximum rate permitted by applicable law, then any subsequent reduction in such interest rate will not reduce the rate of interest payable pursuant to this Section 3.7 below the maximum rate permitted by applicable law until the total amount of interest accrued equals the amount of interest that would have accrued if such otherwise applicable interest rate as set forth in this Section 3.7 had at all times been in effect. Nothing contained in this Section 3.7 shall require the Borrower to pay any amount 13 17 under this Section 3.7 other than to the extent the Borrower shall have funds available therefor. (b) Each Advance will be either a Base Rate Advance or a LIBOR Advance as provided in this Section. Each such Advance will be a Base Rate Advance for the period from the date of its borrowing to (but excluding) the third Business Day following the Liquidity Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance; provided that the Final Advance shall, until repaid in full, be a Base Rate Advance and the Borrower may not convert the Final Advance into a LIBOR Advance. (c) Each LIBOR Advance shall bear interest during each Interest Period at a per annum rate equal to the LIBOR Rate for such Interest Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on the last day of such Interest Period and, in the event of the payment of principal of such LIBOR Advance on a day other than such last day, on the date of such payment (to the extent of interest accrued on the amount of principal repaid). (d) Each Base Rate Advance shall bear interest at a per annum rate equal to the Base Rate plus the Applicable Margin for such Base Rate Advance, payable in arrears on each Regular Distribution Date and, in the event of the payment of principal of such Base Rate Advance on a day other than a Regular Distribution Date, on the date of such payment (to the extent of interest accrued on the amount of principal repaid). (e) Each amount not paid when due hereunder (whether fees, commissions, expenses or other amounts or, to the extent permitted by applicable law, installments of interest on Advances) shall bear interest at the Base Rate. (f) Each change in the Base Rate shall become effective immediately. Section 3.8 Replacement of Borrower. Subject to Section 5.2(b), from time to time, upon the effective date and time specified in a written and completed Notice of Replacement Borrower in substantially the form of Annex III attached hereto (a "Notice of Replacement Borrower") delivered to the Liquidity Provider by the then Borrower, the successor Borrower designated therein shall be substituted for as the Borrower for all purposes hereunder. Section 3.9 Funding Loss Indemnification. The Borrower shall pay to the Liquidity Provider, upon the request of the Liquidity Provider, such amount or amounts as shall be sufficient (in the reasonable opinion of the Liquidity Provider) to compensate it for any loss, cost, or expense incurred as a result of: 14 18 (a) Any payment or prepayment of a LIBOR Advance on a date other than the last day of the Interest Period for such Advance; or (b) Any failure by the Borrower to borrow a LIBOR Advance on the date for borrowing specified in the relevant notice under Section 2.2 or 3.7. Section 3.10 Illegality. Notwithstanding any other provision in this Agreement, if any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Liquidity Provider (or its Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for the Liquidity Provider (or its Lending Office) to maintain or fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity Provider, the outstanding principal amount of the LIBOR Advances shall be converted to Base Rate Advances (a) immediately upon demand of the Liquidity Provider, if such change or compliance with such request, in the judgment of the Liquidity Provider, requires immediate repayment; or (b) at the expiration of the last Interest Period to expire before the effective date of any such change or request. In the event any change of the nature described in the preceding sentence shall make it unlawful or impossible for the Liquidity Provider (or its Lending Office) to maintain or fund its Base Rate Advances, the Liquidity Provider shall have the right to cause a Replacement Liquidity Facility to be substituted for this Agreement, subject to (i) the satisfaction of the conditions precedent to the effectiveness of, and the other provisions regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the Intercreditor Agreement and (ii) such Replacement Liquidity Facility and Replacement Liquidity Provider being reasonably acceptable to America West. ARTICLE IV CONDITIONS PRECEDENT Section 4.1 Conditions Precedent to Effectiveness of Section 2.1. Section 2.1 of this Agreement shall become effective on and as of the first date (the "Effective Date") on which the following conditions precedent have been satisfied or waived: (a) The Liquidity Provider shall have received on or before the Closing Date each of the following, each dated such date (except for those documents delivered pursuant to paragraphs (v) and (vii) of this Section 4.1(a)), and each in form and substance satisfactory to the Liquidity Provider: 15 19 (i) This Agreement duly executed on behalf of the Borrower; (ii) The Intercreditor Agreement duly executed on behalf of each of the parties thereto; (iii) Counterparts (or certified copies thereof) of each of the Operative Agreements (other than this Agreement and the Intercreditor Agreement) which, when taken together, bear the signatures of all of the respective parties thereto and which are in full force and effect in accordance with their respective terms; (iv) A copy of the Prospectus and specimen copies of the Class C Certificates; (v) Evidence that, on the Effective Date, the Class A Certificates, the Class B Certificates, the Class C Certificates, the Class D Certificates and the Class E Certificates will receive long-term credit ratings from Moody's of not lower than A2, Baa2, Ba1, Ba3 and B1, respectively, and from Standard & Poor's of not lower than AA-, A-, BBB-, BB and B+, respectively; (vi) An executed or certified copy of each document, instrument, certificate and opinion delivered pursuant to the Class C Trust Agreement, the Intercreditor Agreement, the Refunding Agreements and the other Operative Agreements (together with, in the case of each such opinion (unless such opinion is addressed to the Liquidity Provider), other than the opinion of counsel for the Underwriters, a letter from the counsel rendering such opinion to the effect that the Liquidity Provider is entitled to rely on such opinion as if it were addressed to the Liquidity Provider); (vii) Evidence that there shall have been made and shall be in full force and effect, all filings, recordings and/or registrations, and there shall have been given or taken any notice or other similar action as may be reasonably necessary or, to the extent reasonably requested by the Liquidity Provider, reasonably advisable, in order to establish, perfect, protect and preserve the right, title and interest, remedies, powers, privileges, liens and security interests of, or for the benefit of, the Trustees and the Liquidity Provider created by the Operative Agreements; (viii) Copies of the appraisals included in the Prospectus; 16 20 (ix) A letter from America West agreeing to provide to the Liquidity Provider the periodic financial reports referred to in Section 8.04(a) of the Trust Agreements; and (x) Such other documents, instruments, opinions and approvals (and, if requested by the Liquidity Provider, certified duplicates or executed copies thereof) as the Liquidity Provider shall have reasonably requested. (b) The following statements shall be true and shall be deemed to have been represented by each party (other than clause (ii) below, which shall be deemed to have been represented only by America West) to the Refunding Agreements as being true on and as of the Effective Date: (i) The representations and warranties of such Person contained in each Refunding Agreement are true and correct on and as of the Effective Date as though made on and as of the Effective Date; and (ii) No event has occurred and is continuing, or would result from the entering into of this Agreement or the making of any Advance, which constitutes a Liquidity Event of Default. The Liquidity Provider shall have received payment in full of all fees and other sums required to be paid to or for the account of the Liquidity Provider on or prior to the Effective Date. (c) All conditions precedent to the issuance of the Certificates under the Trust Agreements shall have been satisfied, all conditions precedent to the effectiveness of the other Liquidity Facilities shall have been satisfied, and all conditions precedent to the purchase of the Certificates by the Underwriters under the Underwriting Agreement shall have been satisfied (except for any of such conditions precedent under the Underwriting Agreement that shall have been waived by the Underwriters). (d) The Borrower shall have received a certificate, dated the date hereof, signed by a duly authorized representative of the Liquidity Provider, certifying that all conditions precedent to the effectiveness of Section 2.1 have been satisfied or waived (other than this Section 4.1(d)). Section 4.2 Conditions Precedent to Borrowing. The obligation of the Liquidity Provider to make an Advance on the occasion of each Borrowing shall be subject to the conditions 17 21 precedent that the Effective Date shall have occurred and, except in the case of a Final Advance, prior to the date of such Borrowing, the Borrower shall have delivered a Notice of Borrowing which conforms to the terms and conditions of this Agreement and has been completed as may be required by the relevant form of the Notice of Borrowing for the type of Advance requested. ARTICLE V COVENANTS Section 5.1 Affirmative Covenants of the Borrower. So long as any Advance shall remain unpaid or the Liquidity Provider shall have any Commitment hereunder or the Borrower shall have any obligation to pay any amount to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity Provider shall otherwise consent in writing: (a) Performance of This and Other Agreements. Punctually pay or cause to be paid all amounts payable by it under this Agreement and the other Operative Agreements and observe and perform in all material respects the conditions, covenants and requirements applicable to it contained in this Agreement and the other Operative Agreements. (b) Reporting Requirements. Furnish to the Liquidity Provider with reasonable promptness, such information and data with respect to the transactions contemplated by the Operative Agreements as from time to time may be reasonably requested by the Liquidity Provider; and permit the Liquidity Provider, upon reasonable notice, to inspect the Borrower's books and records with respect to such transactions and to meet with officers and employees of the Borrower to discuss such transactions. Section 5.2 Negative Covenants of the Borrower. So long as any Advance shall remain unpaid or the Liquidity Provider shall have any Commitment hereunder or the Borrower shall have any obligation to pay any amount to the Liquidity Provider hereunder, the Borrower will not, without the written consent of the Liquidity Provider: (a) Amendments. Modify, amend or supplement; or give any consent to any modification, amendment, or supplement; or make any waiver with respect to; any provision of the Trust Agreements or the Intercreditor Agreement, except for any supplemental agreement to the Trust Agreements provided for in Section 9.01 thereof. (b) Borrower. Appoint or permit or suffer to be appointed any successor Borrower without the prior written 18 22 approval of the Liquidity Provider (which approval shall not be unreasonably withheld). ARTICLE VI FINAL ADVANCE Section 6.1 Final Advance. If (a) both (i) a Triggering Event shall have occurred and be continuing and (ii) a Performing Note Deficiency exists or (b) a Liquidity Event of Default shall have occurred and be continuing, the Liquidity Provider may, in its discretion, make a Final Advance whereupon (i) the Liquidity Provider shall have no further obligation to make Advances hereunder, (ii) all other outstanding Advances shall be automatically converted into Final Advances for purposes of determining the Applicable Liquidity Rate for interest payable thereon, and (iii) subject to Sections 2.7 and 2.9, all Advances, any accrued interest thereon and any other amounts outstanding hereunder shall become immediately due and payable to the Liquidity Provider. ARTICLE VII MISCELLANEOUS Section 7.1 Amendments, Etc. No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Liquidity Provider, and, in the case of an amendment, the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 7.2 Notices, Etc. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telecopier and mailed or delivered or sent by telecopier): Borrower: Fleet National Bank 777 Main Street Hartford, CT 06115 Attention: Corporate Trust Administration Telecopy: (860) 986-7920 19 23 Liquidity Provider: Kredietbank N.V. New York Branch 125 West 55th Street New York, NY 10019 Attention: General Manager Telecopy: (212) 956-5580 or, as to each of the foregoing, at such other address as shall be designated by such Person in a written notice to the others. All such notices and communications shall be effective (i) if given by telecopier, when transmitted to the telecopier number specified above, (ii) if given by mail, when deposited in the mails addressed as specified above, and (iii) if given by other means, when delivered at the address specified above, except that written notices to the Liquidity Provider pursuant to the provisions of Articles II and III hereof shall not be effective until received by the Liquidity Provider. A copy of all notices delivered hereunder to either party shall in addition be delivered to each of the parties to the Refunding Agreements at their respective addresses set forth therein. Section 7.3 No Waiver; Remedies. No failure on the part of the Liquidity Provider to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 7.4 Further Assurances. The Borrower agrees to do such further acts and things and to execute and deliver to the Liquidity Provider such additional assignments, agreements, powers and instruments as the Liquidity Provider may reasonably require or deem advisable to carry into effect the purposes of this Agreement and the other Operative Agreements or to better assure and confirm unto the Liquidity Provider its rights, powers and remedies hereunder and under the other Operative Agreements. Section 7.5 Indemnification; Survival of Certain Provisions. The Liquidity Provider shall be indemnified hereunder to the extent and in the manner described in Sections 10 and 13 of the Lease. In addition, the Borrower agrees to indemnify, protect, defend and hold harmless the Liquidity Provider from, against and in respect of, and shall pay on demand, all Expenses of any kind or nature whatsoever, whether arising before, on or after the date hereof, that may be imposed, incurred by or asserted against any Liquidity Indemnitee, in any way relating to, resulting from, or arising out of or in connection with, this Agreement, the Intercreditor Agreement or the Refunding Agreements; provided, however, that the Borrower 20 24 shall not be required to indemnify, protect, defend and hold harmless any Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee (i) to the extent such Expense is attributable to the gross negligence or willful misconduct of such Liquidity Indemnitee or any Related Indemnitee, (ii) that is ordinary and usual operating overhead expense or (iii) to the extent such Expense is attributable to the failure by such Liquidity Indemnitee or its Related Indemnitee to perform or observe any agreement, covenant or condition on its part to be performed or observed in any Operative Agreement. The indemnities contained in such Sections 10 and 13 of the Lease, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall survive the termination of this Agreement. Section 7.6 Liability of the Liquidity Provider. (a) Neither the Liquidity Provider nor any of its officers or directors shall be liable or responsible for: (i) the use which may be made of the Advances or any acts or omissions of the Borrower or any beneficiary or transferee in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; or (iii) the making of Advances by the Liquidity Provider against delivery of a Notice of Borrowing and other documents which do not comply with the terms hereof; provided, however, that the Borrower shall have a claim against the Liquidity Provider, and the Liquidity Provider shall be liable to the Borrower, to the extent of any damages suffered by the Borrower which were the result of (A) the Liquidity Provider's willful misconduct or negligence in determining whether documents presented hereunder comply with the terms hereof, or (B) any breach by the Liquidity Provider of any of the terms of this Agreement, including, but not limited to, the Liquidity Provider's failure to make lawful payment hereunder after the delivery to it by the Borrower of a Notice of Borrowing strictly complying with the terms and conditions hereof. (b) The Liquidity Provider shall not be liable or responsible in any respect for (i) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with this Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action, inaction or omission which may be taken by it in good faith, absent willful misconduct or negligence (in which event the extent of the Liquidity Provider's potential liability to the Borrower shall be limited as set forth in the immediately preceding paragraph), in connection with this Agreement or any Notice of Borrowing. Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to pay, or cause to be paid (A) on the Effective Date and on such later date or dates on which the Liquidity Provider shall 21 25 make demand, all reasonable out-of-pocket costs and expenses of the Liquidity Provider in connection with the preparation, negotiation, execution, delivery, filing and recording of this Agreement, any other Operative Agreement and any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees and expenses of outside counsel for the Liquidity Provider and (B) on demand, all reasonable costs and expenses of the Liquidity Provider (including reasonable counsel fees and expenses) in connection with (i) the enforcement of this Agreement or any other Operative Agreement, (ii) the modification or amendment of, or supplement to, this Agreement or any other Operative Agreement or such other documents which may be delivered in connection herewith or therewith (whether or not the same shall become effective) or (iii) any action or proceeding relating to any order, injunction, or other process or decree restraining or seeking to restrain the Liquidity Provider from paying any amount under this Agreement, the Intercreditor Agreement or any other Operative Document or otherwise affecting the application of funds in the Cash Collateral Accounts. In addition, the Borrower shall pay any and all recording, stamp and other similar taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, any other Operative Agreement and such other documents, and agrees to save the Liquidity Provider harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes or fees. Section 7.8 Binding Effect; Participations. (a) This Agreement shall be binding upon and inure to the benefit of the Borrower and the Liquidity Provider and their respective successors and assigns, except that neither the Liquidity Provider (except as otherwise provided in this Section 7.8) nor the Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the other party, subject to the requirement of Section 7.8(b). The Liquidity Provider may grant participations herein or in any of its rights or security hereunder and under the other Operative Agreements to such Persons as the Liquidity Provider may in its sole discretion select, subject to the requirement of Section 7.8(b). No such participation by the Liquidity Provider, however, will relieve the Liquidity Provider of its obligations hereunder. In connection with any participation or any proposed participation, the Liquidity Provider may disclose to the participant or the proposed participant any information that the Borrower is required to deliver or to disclose to the Liquidity Provider pursuant to this Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's source of funds may derive in part from its participants. Accordingly, references in this Agreement and the other Operative Agreements to determinations, reserve and capital adequacy requirements, increased costs, reduced receipts and the like as they pertain to 22 26 the Liquidity Provider shall be deemed also to include those of each of its participants (subject, in each case, to the maximum amount that would have been incurred by or attributable to the Liquidity Provider directly if the Liquidity Provider, rather than the participant, had held the interest participated). (b) If, pursuant to subsection (a) above, the Liquidity Provider sells any participation to any bank or other entity (each, a "Participant"), then, concurrently with the effectiveness of such participation, the Participant shall (i) represent to the Liquidity Provider (for the benefit of the Liquidity Provider and the Borrower) either (A) that it is incorporated under the laws of the United States or a state thereof or (B) that under applicable law and treaties, no taxes will be required to be withheld by the Borrower or the Liquidity Provider with respect to any payments to be made to such Participant in respect of this Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a statement that it is incorporated under the laws of the United States or a state thereof or (y) if it is not so incorporated, two copies of a properly completed United States Internal Revenue Service Form 4224 or Form 1001, as appropriate, or other applicable form, certificate or document prescribed by the Internal Revenue Service certifying, in each case, such Participant's entitlement to a complete exemption from United States federal withholding tax in respect to any and all payments to be made hereunder, and (iii) agree (for the benefit of the Liquidity Provider and the Borrower) to provide the Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date that any such form expires or becomes obsolete or (B) after the occurrence of any event requiring a change in the most recent form previously delivered by it and prior to the immediately following due date of any payment by the Borrower hereunder, certifying in the case of a Form 1001 or Form 4224 that such Participant is entitled to a complete exemption from United States federal withholding tax on payments under this Agreement. Unless the Borrower has received forms or other documents reasonably satisfactory to it indicating that payments hereunder are not subject to United States federal withholding tax, the Borrower will withhold taxes as required by law from such payments at the applicable statutory rate without any obligation to gross-up or indemnify pursuant to Section 3.3. (c) Notwithstanding the other provisions of this Section 7.8, the Liquidity Provider may assign and pledge all or any portion of the Advances owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Advances made by the Borrower to the Liquidity Provider in accordance with the terms of this Agreement shall satisfy the 23 27 Borrower's obligations hereunder in respect of such assigned Advance to the extent of such payment. No such assignment shall release the Liquidity Provider from its obligations hereunder. Section 7.9 Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial. (a) Each of the parties hereto hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement or any other Operative Agreement, or for recognition and enforcement of any judgment in respect hereof or thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) if such party does not maintain an office for the transaction of its business in New York, agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form and mail), postage prepaid, to each party hereto at its address set forth in Section 7.2, or at such other address of which the Liquidity Provider shall have been notified pursuant thereto; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. 24 28 (b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and all other common law and statutory claims. The Borrower and the Liquidity Provider each warrant and represent that it has reviewed this waiver with its legal counsel, and that it knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY. Section 7.12 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. Section 7.13 Entirety. This Agreement and the other Operative Agreements constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior understandings and agreements of such parties. Section 7.14 Headings; Section References. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Unless the context otherwise requires or otherwise indicated herein, all Section references in this Agreement are references to Sections hereof. Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. 25 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first set forth above. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: KREDIETBANK N.V., NEW YORK BRANCH, as Liquidity Provider By ________________________________ Name: Title: By ________________________________ Name: Title: 26 30 Annex I to Irrevocable Revolving Credit Agreement INTEREST ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned borrower (the "Borrower"), hereby certifies to KREDIETBANK N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class C Certificates dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of an Interest Advance by the Liquidity Provider to be used for the payment of interest on the Class C Certificates which was payable on the Distribution Date falling on _____________ in accordance with the terms and provisions of the Class C Trust Agreement and the Class C Certificates and has not been paid pursuant to clause sixth of Section 3.2 of the Intercreditor Agreement or clause eighth Section 3.3 of the Intercreditor Agreement, which Advance is requested to be made on _____________. (3) The amount of the Interest Advance requested hereby (i) is $___________ , to be applied in respect of the payment of interest which was due and payable on the Class C Certificates on such Distribution Date, (ii) does not include any amount with respect to the payment of principal of, or premium on, the Class A Certificates, the Class B Certificates, the Class C Certificates, the Class D Certificates or Class E Certificates, or interest on the Class A Certificates, the Class B Certificates, the Class D Certificates or the Class E Certificates, (iii) was computed in accordance with the provisions of the Class C Certificates, the Class C Trust Agreement and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), (iv) does not exceed the Available Commitment on the date hereof, and (v) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will apply the same in accordance with the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the case may be, (b) no portion of such amount shall be applied by the Borrower for 31 any other purpose and (c) no portion of such amount until so applied shall be commingled with other funds held by the Borrower. (5) The Borrower hereby requests that the Advance requested hereby be a Base Rate Advance and that such Base Rate Advance be converted into a LIBOR Rate Advance on the third Business Day following your receipt of this notice. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, the making of the Interest Advance as requested by this Notice of Borrowing shall automatically reduce, subject to reinstatement in accordance with the terms of the Liquidity Agreement, the Available Commitment by an amount equal to the amount of the Interest Advance requested to be made hereby as set forth in clause (i) of paragraph (3) of this Certificate and such reduction shall automatically result in corresponding reductions in the amounts available to be borrowed pursuant to a subsequent Advance. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _ day of ________________, ________. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 2 32 SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING [Insert Copy of Computations in accordance with Interest Advance Notice of Borrowing] 3 33 Annex II to Irrevocable Revolving Credit Agreement DOWNGRADE ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned subordination agent (the "Borrower"), hereby certifies to KREDIETBANK, N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class C Certificates dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of the Downgrade Advance by the Liquidity Provider to be used for the funding of the Class C Cash Collateral Account in accordance with Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading of the debt rating of the Liquidity Provider issued by either Rating Agency below the applicable Threshold Rating, which Advance is requested to be made on ___________. (3) The amount of the Downgrade Advance requested hereby (i) is $___________, which equals the Available Commitment on the date hereof and is to be applied in respect of the funding of the Class C Cash Collateral Account in accordance with Section 3.6(c) of the Intercreditor Agreement, (ii) does not include any amount with respect to the payment of the principal of, or premium on, the Class C Certificates, or principal of, or interest or premium on, the Class A Certificates, the Class B Certificates, the Class D Certificates or the Class E Certificates, (iii) was computed in accordance with the provisions of the Class C Certificates, the Class C Trust Agreement and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), and (iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing under the Liquidity Agreement. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will deposit such amount in the Class C Cash Collateral Account and apply the same in accordance with the terms of Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such amount shall be applied by the Borrower for any other purpose and (c) no portion of such amount until so applied shall be commingled with other funds held by the Borrower. 34 (5) The Borrower hereby requests that the Advance requested hereby be a Base Rate Advance and that such Base Rate Advance be converted into a LIBOR Rate Advance on the third Business Day following your receipt of this notice. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of the Downgrade Advance as requested by this Notice of Borrowing shall automatically and irrevocably terminate the obligation of the Liquidity Provider to make further Advances under the Liquidity Agreement; and (B) following the making by the Liquidity Provider of the Downgrade Advance requested by this Notice of Borrowing, the Borrower shall not be entitled to request any further Advances under the Liquidity Agreement. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _ day of __________, _________. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 2 35 SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING [Insert Copy of computations in accordance with Downgrade Advance Notice of Borrowing] 36 Annex III to Irrevocable Revolving Credit Agreement NOTICE OF REPLACEMENT BORROWER [Date] Ladies and Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: [Name of Transferee] [Address of Transferee] all rights of the undersigned as Borrower under the Liquidity Agreement referred to above. The transferee has succeeded the undersigned as Subordination Agent under the Intercreditor Agreement referred to in the first paragraph of the Liquidity Agreement. By this transfer, all rights of the undersigned as Borrower under the Liquidity Agreement are transferred to the transferee and the transferee shall hereafter have the sole rights as Borrower thereunder. The undersigned shall pay any costs and expenses of such transfer, including, but not limited to, transfer taxes or governmental charges. We ask that this transfer be effective as of __________, ________. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By ________________________________ Name: Title: 37 Annex IV to Irrevocable Revolving Credit Agreement NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT [Date] Ladies and Gentlemen: The undersigned, a duly authorized signatory of the undersigned subordination agent (the "Borrower"), hereby notifies Kredietbank N.V., acting through its New York Branch (the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that, pursuant to Section 2.4(a) of the Liquidity Agreement, the Commitment has been automatically reduced to $_________. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the _ day of __________, ______. FLEET NATIONAL BANK, not in its individual capacity but solely as Subordination Agent, as Borrower By_______________________________ Name: Title: 2 EX-4.10 11 FORM OF INTERCREDITOR AGREEMENT 1 EXHIBIT 4.10 INTERCREDITOR AGREEMENT Dated as of November 26, 1996 AMONG FLEET NATIONAL BANK, not in its individual capacity but solely as Trustee under the America West Airlines Pass Through Trust 1996-1A, America West Airlines Pass Through Trust 1996-1B, America West Airlines Pass Through Trust 1996-1C America West Airlines Pass Through Trust 1996-1D, and America West Airlines Pass Through Trust 1996-1E. KREDIETBANK N.V., NEW YORK BRANCH, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider, AND FLEET NATIONAL BANK, not in its individual capacity except as expressly set forth herein but solely as Subordination Agent and trustee hereunder 2 TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS ....................................................... 2 SECTION 1.1 Definitions........................................................ 2 ARTICLE II TRUST ACCOUNTS; CONTROLLING PARTY.................................. 21 SECTION 2.1 Agreement to Terms of Subordination; Payments from Monies Received Only .............................................. 21 SECTION 2.2 Trust Accounts..................................................... 22 SECTION 2.3 Deposits to the Collection Account and Special Payments Account................................................... 23 SECTION 2.4 Distributions of Special Payments.................................. 23 SECTION 2.5 Designated Representatives......................................... 26 SECTION 2.6 Controlling Party.................................................. 27 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED.......... 28 SECTION 3.1 Written Notice of Distribution..................................... 28 SECTION 3.2 Distribution of Amounts on Deposit in the Collection Account....... 31 SECTION 3.3 Distribution of Amounts on Deposit Following a Triggering Event.... 32 SECTION 3.4 Other Payments..................................................... 34 SECTION 3.5 Payments to the Trustees and the Liquidity Providers............... 34 SECTION 3.6 Liquidity Facilities............................................... 35 ARTICLE IV EXERCISE OF REMEDIES .............................................. 41 SECTION 4.1 Directions from the Controlling Party.............................. 41 SECTION 4.2 Remedies Cumulative................................................ 42 SECTION 4.3 Discontinuance of Proceedings...................................... 42 SECTION 4.4 Right of Certificateholders to Receive Payments Not to Be Impaired .......................................................... 43 SECTION 4.5 Undertaking for Costs.............................................. 43
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Page ARTICLE V DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC ..................................................... 43 SECTION 5.1 Notice of Indenture Default or Triggering Event.................... 43 SECTION 5.2 Indemnification.................................................... 44 SECTION 5.3 No Duties Except as Specified in Intercreditor Agreement........... 44 SECTION 5.4 Notice from the Liquidity Providers and Trustees................... 45 ARTICLE VI THE SUBORDINATION AGENT ........................................... 45 SECTION 6.1 Authorization; Acceptance of Trusts and Duties..................... 45 SECTION 6.2 Absence of Duties.................................................. 46 SECTION 6.3 No Representations or Warranties as to Documents................... 46 SECTION 6.4 No Segregation of Monies; No Interest.............................. 46 SECTION 6.5 Reliance; Agents; Advice of Counsel................................ 46 SECTION 6.6 Capacity in Which Acting........................................... 47 SECTION 6.7 Compensation....................................................... 47 SECTION 6.8 May Become Certificateholder....................................... 47 SECTION 6.9 Subordination Agent Required; Eligibility.......................... 47 SECTION 6.10 Money to Be Held in Trust.......................................... 48 ARTICLE VII INDEMNIFICATION AND REIMBURSEMENT OF SUBORDINATION AGENT........... 48 SECTION 7.1 Scope of Indemnification and Reimbursement......................... 48 ARTICLE VIII SUCCESSOR SUBORDINATION AGENT...................................... 48 SECTION 8.1 Replacement of Subordination Agent; Appointment of Successor........................................... 48
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Page ARTICLE IX SUPPLEMENTS AND AMENDMENTS ........................................ 50 SECTION 9.1 Amendments, Waivers, Etc........................................... 50 SECTION 9.2 Subordination Agent Protected...................................... 51 SECTION 9.3 Effect of Supplemental Agreements.................................. 51 SECTION 9.4 Notice to Rating Agencies.......................................... 51 ARTICLE X MISCELLANEOUS ..................................................... 52 SECTION 10.1 Termination of Intercreditor Agreement............................. 52 SECTION 10.2 Intercreditor Agreement for Benefit of Trustees, Liquidity Providers and Subordination Agent.................................. 52 SECTION 10.3 Notices............................................................ 52 SECTION 10.4 Severability....................................................... 53 SECTION 10.5 No Oral Modifications or Continuing Waivers........................ 53 SECTION 10.6 Successors and Assigns............................................. 53 SECTION 10.7 Headings........................................................... 53 SECTION 10.8 Counterpart Form................................................... 53 SECTION 10.9 Subordination...................................................... 53 SECTION 10.10 GOVERNING LAW.................................................... 55 Schedule 1 Indentures Schedule 2 Refunding Agreements
iii 5 INTERCREDITOR AGREEMENT INTERCREDITOR AGREEMENT (as amended, modified and supplemented from time to time, this "Agreement") dated as of November 26, 1996, among FLEET NATIONAL BANK, a national banking association ("Fleet"), not in its individual capacity but solely as Trustee of each Trust (each as defined below), KREDIETBANK N.V., acting through its New York Branch ("Kredietbank"), as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider, and FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as expressly set forth herein, but solely as Subordination Agent and trustee hereunder (in such capacity, together with any successor appointed pursuant to Article VIII hereof, the "Subordination Agent"). WHEREAS, all capitalized terms used herein shall have the respective meanings referred to in Article I hereof; WHEREAS, pursuant to each Indenture, the related Owner Trustee proposes to issue on a nonrecourse basis up to five series of Equipment Notes to refinance the current indebtedness of such Owner Trustee originally incurred to finance the purchase of the Aircraft or Spare Engine referred to in such Indenture which has been leased to America West pursuant to the related Lease; WHEREAS, pursuant to the Refunding Agreements, each Trust will acquire those Equipment Notes having an interest rate equal to the interest rate applicable to the Certificates to be issued by such Trust; WHEREAS, pursuant to each Trust Agreement, the Trust created thereby proposes to issue a single series of Certificates (a "Class") bearing the interest rate and having the final distribution date described in such Trust Agreement on the terms and subject to the conditions set forth therein; WHEREAS, pursuant to the Underwriting Agreement, the Underwriters propose to purchase the Certificates issued by each Trust in the aggregate face amount set forth under the name of such Trust on Schedule I thereto on the terms and subject to the conditions set forth therein; WHEREAS, each Liquidity Provider proposes to enter into a revolving credit agreement (each, a "Liquidity Facility") with the Subordination Agent, as agent for the respective Trustee of each Trust (other than the Class D and Class E Trusts), for the benefit of the Certificateholders of such Trust; and WHEREAS, it is a condition precedent to the obligations of the Underwriters under the Underwriting Agreement that the Subordination Agent, the Trustees and the Liquidity Providers agree to the terms of subordination set forth in this Agreement in respect of each Class of Certificates, and the Subordination Agent, the Trustees and the Liquidity Providers, by entering into 6 this Agreement, hereby acknowledge and agree to such terms of subordination and the other provisions of this Agreement. NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (3) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (4) the term "including" shall mean "including without limitation". "Acceleration" means, with respect to the amounts payable in respect of the Equipment Notes issued under any Indenture, the declaration or deemed declaration (pursuant to Section 4.04(b) of such Indenture) of such amounts to be immediately due and payable. "Accelerate" and "Accelerated" have meanings correlative to the foregoing. "Adjusted Expected Distributions" means, with respect to the Certificates of any Class on any Current Distribution Date, the sum of (x) the amount of accrued and unpaid interest on such Certificates plus (y) the greater of: (A) the difference between (x) the Pool Balance of such Certificates as of the immediately preceding Distribution Date and (y) the Pool Balance of such Certificates as of the Current Distribution Date, calculated on the basis that (i) the principal of the Non-Performing Equipment Notes held in such Trust has been paid in full and -2- 7 such payments have been distributed to the holders of such Certificates and (ii) the principal of the Performing Equipment Notes has been paid when due (but without giving effect to any acceleration of Performing Equipment Notes) and has been distributed to the holders of such Certificates; and (B) the amount if any by which (i) the Pool Balance of such Class of Certificates as of the immediately preceding Distribution Date exceeds (ii) the Aggregate LTV Collateral Amount for such Class of Certificates for the Current Distribution Date; provided that, until the date of the initial LTV Appraisals, clause (B) above shall not be applicable. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For the purposes of this definition, "control" means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Aggregate LTV Collateral Amount" means, for any Class of Certificates for any Distribution Date, the sum of the applicable LTV Collateral Amounts for each Aircraft and Spare Engine minus the Pool Balance for each Class of Certificates, if any, senior to such Class after giving effect to any distribution of principal on such Distribution Date on such senior Class or Classes, but in no event an amount less than zero. "Agreement" has the meaning assigned to such term in the heading hereof. "Aircraft" means, with respect to each Indenture relating to Equipment Notes that are secured by an aircraft, the "Aircraft" referred to therein. "America West" means America West Airlines, Inc., a Delaware corporation, and its successors and assigns. "America West Bankruptcy Event" means the occurrence and continuation of any of the following: (a) the commencement of an involuntary case or other proceeding in respect of America West in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law in the United States or seeking the -3- 8 appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of America West or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of ninety (90) consecutive days or an order, judgment or decree shall be entered in any proceeding by any court of competent jurisdiction appointing, without the consent of America West, a receiver, trustee or liquidator of America West, or of substantially all of its property, or sequestering substantially all of the property of America West and any such order, judgment or decree or appointment or sequestration shall be final or shall remain in force undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof; or (b) the commencement by America West of a voluntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or other similar law in the United States, or the consent by America West to the appointment of or taking, possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of America West or for all or substantially all of its property, or the making by America West of any assignment for the benefit of creditors generally or the taking by America West of any corporate action to authorize any of the foregoing. "Appraised Current Market Value" of any Aircraft or Spare Engine means the lower of the average or the median of the most recent three LTV Appraisals of such Aircraft or Spare Engine obtained pursuant to Section 4.1(a)(iv). "Appraisers" means BK Associates, Inc., Aircraft Information Services, Inc. and Morton Beyer and Associates. "Available Amount" means, with respect to any Liquidity Facility on any drawing date, an amount equal to (a) the Stated Amount of such Liquidity Facility, less (b) the amount of each Interest Drawing honored by the Liquidity Provider under such Liquidity Facility on or prior to such date which has not been reimbursed or reinstated as of such date; provided that, following a Downgrade Drawing or a Final Drawing under such Liquidity Facility, the Available Amount of such Liquidity Facility shall be zero. "Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks are required or -4- 9 authorized to close in New York, New York or Hartford Connecticut. "Cash Collateral Account" means the Class A Cash Collateral Account, the Class B Cash Collateral Account or the Class C Cash Collateral Account, as applicable. "Certificate" means a Class A Certificate, a Class B Certificate, a Class C Certificate, a Class D Certificate or a Class E Certificate, as applicable. "Certificateholder" means any holder of one or more Certificates. "Class" has the meaning assigned to such term in the preliminary statements to this Agreement. "Class A Cash Collateral Account" means an Eligible Deposit Account in the name of the Subordination Agent maintained at the Subordination Agent, into which all amounts drawn under the Class A Liquidity Facility pursuant to Section 3.6(c) or 3.6(i) shall be deposited. "Class A Certificateholder" means, at any time, any holder of one or more Class A Certificates. "Class A Certificates" means the certificates issued by the Class A Trust, substantially in the form of Exhibit A to the Class A Trust Agreement, and authenticated by the Class A Trustee, representing fractional undivided interests in the Class A Trust, and any certificates issued in exchange therefor or replacement thereof pursuant to the terms of the Class A Trust Agreement. "Class A Liquidity Facility" means, initially, the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between the Subordination Agent, as agent and trustee for the Class A Trust, and the Class A Liquidity Provider, and, from and after the replacement of such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms. "Class A Liquidity Provider" means Kredietbank N.V., acting through its New York Branch, together with any Replacement Liquidity Provider which has issued a Replacement Liquidity Facility to replace the Class A Liquidity Facility pursuant to Section 3.6(e). "Class A Trust" means America West Airlines 1996-1A Pass Through Trust created and administered pursuant to the Class A Trust Agreement. -5- 10 "Class A Trust Agreement" means the Pass Through Trust Agreement dated as of November 26, 1996 between America West and the Class A Trustee, as supplemented by the Supplement No. 1996-1A thereto dated November 26, 1996, governing the creation and administration of the Class A Trust and the issuance of the Class A Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Class A Trustee" means Fleet, not in its individual capacity except as expressly set forth in the Class A Trust Agreement, but solely as trustee under the Class A Trust Agreement, together with any successor trustee appointed pursuant thereto. "Class B Cash Collateral Account" means an Eligible Deposit Account in the name of the Subordination Agent maintained at the Subordination Agent, into which all amounts drawn under the Class B Liquidity Facility pursuant to Section 3.6(c) or 3.6(i) shall be deposited. "Class B Certificateholder" means, at any time, any holder of one or more Class B Certificates. "Class B Certificates" means the certificates issued by the Class B Trust, substantially in the form of Exhibit A to the Class B Trust Agreement, and authenticated by the Class B Trustee, representing fractional undivided interests in the Class B Trust, and any certificates issued in exchange therefor or replacement thereof pursuant to the terms of the Class B Trust Agreement. "Class B Liquidity Facility" means, initially, the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between the Subordination Agent, as agent and trustee for the Class B Trust, and the Class B Liquidity Provider, and, from and after the replacement of such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms. "Class B Liquidity Provider" means Kredietbank N.V., acting through its New York Branch, together with any Replacement Liquidity Provider which has issued a Replacement Liquidity Facility to replace the Class B Liquidity Facility pursuant to Section 3.6(e). "Class B Trust" means America West Airlines 1996-1B Pass Through Trust created and administered pursuant to the Class B Trust Agreement. -6- 11 "Class B Trust Agreement" means the Pass Through Trust Agreement dated as of November 26, 1996, between America West and the Class B Trustee, as supplemented by the Supplement No. 1996-1B thereto dated November 26, 1996, governing the creation and administration of the Class B Trust and the issuance of the Class B Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Class B Trustee" means Fleet, not in its individual capacity except as expressly set forth in the Class B Trust Agreement, but solely as trustee under the Class B Trust Agreement, together with any successor trustee appointed pursuant thereto. "Class C Cash Collateral Account" means an Eligible Deposit Account in the name of the Subordination Agent maintained at the Subordination Agent, into which all amounts drawn under the Class C Liquidity Facility pursuant to Section 3.6(c) or 3.6(i) shall be deposited. "Class C Certificateholder" means, at any time, any holder of one or more Class C Certificates. "Class C Certificates" means the certificates issued by the Class C Trust, substantially in the form of Exhibit A to the Class C Trust Agreement, and authenticated by the Class C Trustee, representing fractional undivided interests in the Class C Trust, and any certificates issued in exchange therefor or in replacement thereof pursuant to the terms of the Class C Trust Agreement. "Class C Liquidity Facility" means, initially, the Irrevocable Revolving Credit Agreement dated as of November 26, 1996, between the Subordination Agent, as agent and trustee for the Class C Trust, and the Class C Liquidity Provider and, from and after the replacement of such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms. "Class C Liquidity Provider" means Kredietbank N.V., acting through its New York Branch, together with any Replacement Liquidity Provider which has issued a Replacement Liquidity Facility to replace the Class C Liquidity Facility pursuant to Section 3.6(e). "Class C Trust" means America West Airlines 1996-1C Pass Through Trust created and administered pursuant to the Class C Trust Agreement. -7- 12 "Class C Trust Agreement" means the Pass Through Trust Agreement dated as of November 26, 1996, between America West and the Class C Trustee, as supplemented by the Supplement No. 1996-1C thereto dated November 26, 1996, governing the creation and administration of the Class C Trust and the issuance of the Class C Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Class C Trustee" means Fleet, not in its individual capacity except as expressly set forth in the Class C Trust Agreement, but solely as trustee under the Class C Trust Agreement, together with any successor trustee appointed pursuant thereto. "Class D Certificateholder" means, at any time, any holder of one or more Class D Certificates. "Class D Certificates" means the certificates issued by the Class D Trust, substantially in the form of Exhibit A to the Class D Trust Agreement, and authenticated by the Class D Trustee, representing fractional undivided interests in the Class D Trust, and any certificates issued in exchange therefor or in replacement thereof pursuant to the terms of the Class D Trust Agreement. "Class D Trust" means America West Airlines 1996-1D Pass Through Trust created and administered pursuant to the Class D Trust Agreement. "Class D Trust Agreement" means the Pass Through Trust Agreement dated as of November 26, 1996, between America West and the Class D Trustee, as supplemented by the Supplement No. 1996- 1D thereto dated November 26, 1996, governing the creation and administration of the Class D Trust and the issuance of the Class D Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Class D Trustee" means Fleet, not in its individual capacity except as expressly set forth in the Class D Trust Agreement, but solely as trustee under the Class D Trust Agreement, together with any successor trustee appointed pursuant thereto. "Class E Certificateholder" means, at any time, any holder of one or more Class E Certificates. "Class E Certificates" means the certificates issued by the Class E Trust, substantially in the form of Exhibit A to the Class E Trust Agreement, and authenticated by the Class E Trustee, representing fractional undivided interests in the -8- 13 Class E Trust, and any certificates issued in exchange therefor or in replacement thereof pursuant to the terms of the Class E Trust Agreement. "Class E Trust" means America West Airlines 1996-1E Pass Through Trust created and administered pursuant to the Class E Trust Agreement. "Class E Trust Agreement" means the Pass Through Trust Agreement dated as of November 26, 1996, between America West and the Class E Trustee, as supplemented by the Supplement No. 1996-1E thereto dated November 26, 1996, governing the creation and administration of the Class E Trust and the issuance of the Class E Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Class E Trustee" means Fleet, not in its individual capacity except as expressly set forth in the Class E Trust Agreement, but solely as trustee under the Class E Trust Agreement, together with any successor trustee appointed pursuant thereto. "Closing Date" means November 26, 1996. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder. "Collection Account" means the Eligible Deposit Account established by the Subordination Agent pursuant to Section 2.2 which the Subordination Agent shall make deposits in and withdrawals from in accordance with this Agreement. "Controlling Party" means the Person entitled to act as such pursuant to the terms of Section 2.6. "Corporate Trust Office" means, with respect to any Trustee, the Subordination Agent or any Indenture Trustee, the office of such Person in the city at which, at any particular time, its corporate trust business shall be principally administered. "Current Distribution Date" means a Distribution Date specified as a reference date for calculating the Adjusted Expected Distributions or Expected Distributions with respect to the Certificates of any Trust as of such Distribution Date. "Designated Representatives" means the Subordination Agent Representatives, the Trustee Representatives and the LP Representatives identified under Section 2.5. -9- 14 "Distribution Date" means a Regular Distribution Date or a Special Distribution Date. "Dollars" means United States dollars. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c). "Downgraded Facility" has the meaning assigned to such term in Section 3.6(c). "Drawing" means an Interest Drawing, a Final Drawing or a Downgrade Drawing, as the case may be. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. An Eligible Deposit Account may be maintained with a Liquidity Provider so long as such Liquidity Provider is an Eligible Institution; provided that such Liquidity Provider shall have waived all rights of setoff and counterclaim with respect to such account. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Eligible Investments" means (a) investments in obligations of, or guaranteed by, the United States Government having maturities no later than 90 days following the date of such investment, (b) investments in open market commercial paper of any corporation incorporated under the laws of the United States of America or any state thereof with a short-term unsecured debt rating issued by Moody's and Standard & Poor's of at least A-1 and P-1, respectively, having maturities no later than 90 days following the date of such investment, (c) investments in negotiable certificates of deposit, time deposits, banker's acceptances, commercial paper or other direct obligations of, or obligations guaranteed by, commercial banks organized under the laws of the United States or of any political subdivision thereof (or any U.S. branch of a foreign bank) with -10- 15 issuer ratings of at least B/C by Thomson BankWatch, Inc., having maturities no later than 90 days following the date of such investment or (d) investments in any U.S. money market fund registered under the Investment Company Act of 1940, as amended, which has been issued the highest rating in its category by Moody's and Standard & Poor's that invests solely in obligations described in clause (a) above; provided, however, that (x) all Eligible Investments that are bank obligations shall be denominated in U.S. dollars; and (y) the aggregate amount of Eligible Investments at any one time that are bank obligations issued by any one bank shall not be in excess of 5% of such bank's capital surplus; provided further that (1) any investment of the types described in clauses (a), (b), (c) and (d) above may be made through a repurchase agreement in commercially reasonable form with a bank or other financial institution qualifying as an Eligible Institution so long as such investment is held by a third party custodian also qualifying as an Eligible Institution, and (2) all such investments set forth in clauses (a), (b), (c) and (d) above mature no later than the Business Day immediately preceding the next Regular Distribution Date; provided further, however, that in the case of any Eligible Investment issued by a domestic branch of a foreign bank, the income from such investment shall be from sources within the United States for purposes of the Code. Notwithstanding the foregoing, no investment of the types described in clause (b), (c) or (d) above which is issued or guaranteed by a Liquidity Provider or America West or any of their respective Affiliates shall be an Eligible Investment. "Equipment" means, with respect to each Indenture, the "Aircraft" or "Spare Engine" referred to therein. "Equipment Notes" means, at any time, the Series A Equipment Notes, the Series B Equipment Notes, the Series C Equipment Notes, the Series D Equipment Notes and the Series E Equipment Notes, collectively, and in each case, any Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of the Indentures. "Expected Distributions" means, with respect to the Certificates of any Trust on any Current Distribution Date, the sum of (x) accrued and unpaid interest on such Certificates and (y) the difference between (A) the Pool Balance of such Certificates as of the immediately preceding Distribution Date and (B) the Pool Balance of such Certificates as of the Current Distribution Date, calculated on the basis that the principal of the Equipment Notes held in such Trust has been paid when due (whether at stated maturity or upon redemption, prepayment, purchase or acceleration or otherwise) and such payments have been distributed to the holders of such Certificates. -11- 16 "Final Distributions" means, with respect to the Certificates of any Trust on any Distribution Date, the sum of (a) the aggregate amount of all accrued and unpaid interest on such Certificates and (b) the Pool Balance of such Certificates as of the immediately preceding Distribution Date. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Final Legal Distribution Date" means, for the Class A Certificates, January 2, 2011, for the Class B Certificates, July 2, 2009, for the Class C Certificates, January 2, 2006, for the Class D Certificates, July 2, 2002 and for the Class E Certificates, January 2, 2004. "Fleet" has the meaning assigned to such term in the heading of this Agreement. "Indenture" means each Trust Indenture and Security Agreement listed on Schedule 1 hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Indenture Default" means, with respect to any Indenture, any Indenture Event of Default (as such term is defined in such Indenture) thereunder. "Indenture Trustee" means, with respect to any Indenture, the indenture trustee thereunder. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a). "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means, with respect to each Indenture, the "Lease" referred to therein. "Lien" means any mortgage, pledge, lien, charge, claim, disposition of title, encumbrance or security interest of any kind, including, without limitation, any thereof arising under any conditional sales or other title retention agreement. "Liquidity Event of Default" with respect to any Liquidity Facility, has the meaning assigned to such term in such Liquidity Facility. -12- 17 "Liquidity Expenses" means all Liquidity Obligations other than (i) the principal amount of any Drawings under the Liquidity Facilities and (ii) any interest accrued on any Liquidity Obligations. "Liquidity Facility" means, at any time, the Class A Liquidity Facility, the Class B Liquidity Facility or the Class C Liquidity Facility, as applicable. "Liquidity Obligations" means all principal, interest, fees and other amounts owing to the Liquidity Providers under the Liquidity Facilities, Sections 10 and 13 of the Leases and Section 21 of the Refunding Agreements. "Liquidity Provider" means, at any time, the Class A Liquidity Provider, the Class B Liquidity Provider or the Class C Liquidity Provider, as applicable. "LP Incumbency Certificate" has the meaning assigned to such term in Section 2.5(c). "LP Representatives" has the meaning assigned to such term in Section 2.5(c). "LTV Appraisal" means a current fair market appraisal (which may be a "desktop" appraisal) performed by any Appraiser or any other nationally recognized appraiser on the basis of an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller under no compulsion to sell, both parties having knowledge of all relevant facts. "LTV Collateral Amount" of any Aircraft or Spare Engine for any Class of Certificates on any Distribution Date means the lesser of (i) the LTV Ratio for such Class of Certificates multiplied by the Appraised Current Market Value of such Aircraft or Spare Engine and (ii) the outstanding principal amount of the Equipment Notes secured by such Aircraft or Spare Engine after giving effect to any principal payments of such Equipment Notes on or before such Distribution Date. "LTV Ratio" means for the Class A Certificates 39.4%, for the Class B Certificates 54.1%, for the Class C Certificates 69.1%, for the Class D Certificates 80.8% and for the Class E Certificates 93.4%. "Margin" has the meaning assigned thereto in each of the Liquidity Facilities. "Minimum Sale Price" means, with respect to any Equipment or the Equipment Notes issued in respect of such Equipment, at any time, the lesser of (a) 75% of the Appraised -13- 18 Current Market Value of such Equipment based upon the most recent LTV Appraisal and (b) the aggregate outstanding principal amount of such Equipment Notes, plus accrued and unpaid interest thereon. "Moody's" means Moody's Investors Service, Inc. "Non-Controlling Party" means, at any time, any Trustee or Liquidity Provider which is not the Controlling Party at such time. "Non-Performing Equipment Notes" means Equipment Notes issued pursuant to an Indenture other than Performing Equipment Notes. "Officer's Certificate" of any Person means a certification signed by a Responsible Officer of such Person. "Operative Agreements" means this Agreement, the Liquidity Facilities, the Indentures, the Trust Agreements, the Underwriting Agreement, the Refunding Agreements, the Leases, the Equipment Notes and the Certificates, together with all exhibits and schedules included with any of the foregoing and each of the other documents and instruments referred to in the definition of "Operative Documents" contained in the Leases. "Outstanding" means, when used with respect to each Class of Certificates, as of the date of determination, all Certificates of such Class theretofore authenticated and delivered under the related Trust Agreement, except: (i) Certificates of such Class theretofore cancelled by the Registrar (as defined in such Trust Agreement) or delivered to the Trustee thereunder or such Registrar for cancellation; (ii) Certificates of such Class for which money in the full amount required to make the final distribution with respect to such Certificates pursuant to Section 11.01 of such Trust Agreement has been theretofore deposited with the related Trustee in trust for the holders of such Certificates as provided in Section 4.01 of such Trust Agreement pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates of such Class in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to such Trust Agreement; provided, however, that in determining whether the holders of the requisite outstanding amount of such Certificates have given any -14- 19 request, demand, authorization, direction, notice, consent or waiver hereunder, any Certificates owned by America West, any related Owner Trustee, any related Owner Participant or any Affiliate of such Person shall be disregarded and deemed not to be outstanding (provided that if any such Person or Affiliate thereof owns 100% of the Certificates of any Class, such Certificates shall not be so disregarded), except that, in determining whether such Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Certificates that a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Certificates so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the applicable Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not America West or any of its Affiliates. "Overdue Scheduled Payment" means any Scheduled Payment which is not in fact received by the Subordination Agent within five days of the Scheduled Payment Date relating thereto. "Owner Participant" means, with respect to any Refunding Agreement, the Owner Participant (as defined therein). "Owner Trustee" means, with respect to any Indenture, the Owner Trustee (as defined therein) not in its individual capacity but solely as trustee under the related owner trust agreement, together with any successor trustee appointed pursuant to such owner trust agreement. "Performing Equipment Note" means an Equipment Note issued pursuant to an Indenture with respect to which no payment default has occurred and is continuing (without giving effect to any acceleration thereof); provided that in the event of a bankruptcy proceeding involving America West under Title 11 of the United States Code (the "Bankruptcy Code"), (i) any payment default existing during 60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer period as may apply under Section 1110(b) of the Bankruptcy Code) (the "Section 1110 Period") shall not be taken into consideration, unless during such period the trustee in such proceeding or America West refuses to assume or agree to perform its obligations under the Lease related to such Equipment Notes and (ii) any payment default occurring after the date of the order of relief in such proceeding shall not be taken into consideration if such payment default is cured under Section 1110(a)(1)(B) of the Bankruptcy Code before the later of (A) 30 days after the date of such default or (B) the expiration of the Section 1110 Period. "Performing Note Deficiency" means any time that less than 65% of the then aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes. -15- 20 "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, trustee, unincorporated organization or government or any agency or political subdivision thereof. "Pool Balance" means, with respect to each Trust or the Certificates issued by any Trust, as of any date, (i) the original aggregate face amount of the Certificates of such Trust less (ii) the aggregate amount of all payments made in respect of the Certificates of such Trust other than payments made in respect of interest or premium thereon or reimbursement of any costs and expenses in connection therewith. The Pool Balance for each Trust or the Certificates issued by any Trust as of any Distribution Date shall be computed after giving effect to any payment of principal, if any, on the Equipment Notes or other Trust Property held in such Trust and the distribution thereof to be made on such Distribution Date. "Proceeding" means any suit in equity, action at law or other judicial or administrative proceeding. "PTC Event of Default" means, with respect to each Trust Agreement, the failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance of the applicable Class of Certificates on the Final Legal Distribution Date for such Class or (ii) interest due on such Certificates on any Distribution Date (unless, in the case of the Class A, Class B or Class C Certificates, the Subordination Agent shall have made an Interest Drawing with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the holders of the Certificates entitled thereto). "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's and Standard & Poor's. "Ratings Confirmation" means, with respect to any action proposed to be taken, a written confirmation from each of the Rating Agencies that such action would not result in (i) a reduction of the rating for any Class of Certificates below the then current rating for such Class of Certificates or (ii) a withdrawal or suspension of the rating of any Class of Certificates. "Refunding Agreements" means each of the Refunding Agreements listed on Schedule 2 hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. -16- 21 "Regular Distribution Dates" means each January 2 and July 2, commencing on January 2, 1997; provided, however, that, if any such day shall not be a Business Day, the regular distribution shall be made on the next succeeding Business Day without additional interest. "Replacement Liquidity Facility" means, for any Trust, an irrevocable revolving credit agreement in substantially the form of the initial Liquidity Facility for such Trust, including reinstatement provisions or in such other form (which may include a letter of credit) as shall permit the Rating Agencies to confirm in writing their respective ratings then in effect for the Certificates (before downgrading of such ratings, if any, as a result of the downgrading of the Liquidity Provider), in a face amount equal to the Required Amount for such Liquidity Facility and issued by a Replacement Liquidity Provider, provided that, if a form of Liquidity Facility that is not substantially in the form of the replaced Liquidity Facility is to be used, America West shall have received a satisfactory opinion of tax counsel satisfactory to America West with respect to such form of Replacement Liquidity Facility and to the effect that the related Trust continues to be a "grantor trust" (and a copy of such opinion shall be furnished to the Subordination Agent). "Replacement Liquidity Provider" means a Person having unsecured debt ratings which are equal to or higher than the Threshold Rating, who issues a Replacement Liquidity Facility. "Required Amount" means, with respect to each Liquidity Facility and each Cash Collateral Account related thereto, for any day, the sum of the aggregate amount of interest, calculated at the rate per annum equal to the Stated Interest Rate for the related Class of Certificates, that would be payable on such Class of Certificates on each of the three successive Regular Distribution Dates immediately following such day or, if such day is a Regular Distribution Date, on such day and the succeeding two Regular Distribution Dates, in each case calculated on the basis of the Pool Balance of such Class of Certificates on such date and without regard to expected future payments of principal on such Class of Certificates. "Responsible Officer" means (i) with respect to the Subordination Agent and each of the Trustees, any officer in the corporate trust administration department of the Subordination Agent or such Trustee or any other officer customarily performing functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject and (ii) with respect to each Liquidity Provider, any authorized officer of such Liquidity Provider. -17- 22 "Scheduled Payment" means, with respect to any Equipment Note, (i) any payment of principal and interest on such Equipment Note (other than an Overdue Scheduled Payment) due from the obligor thereon or (ii) any payment of interest on the corresponding Class of Certificates with funds drawn under any Liquidity Facility, which payment represents the installment of principal at the stated maturity of such installment of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided that any payment of principal of, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. "Scheduled Payment Date" means, with respect to any Scheduled Payment, the date on which such Scheduled Payment is scheduled to be made. "Series A Equipment Notes" means the 6.85% Series A Equipment Notes issued pursuant to each Indenture by the related Owner Trustee and authenticated by the Indenture Trustee thereunder, and any such Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture. "Series B Equipment Notes" means the 6.93% Series B Equipment Notes issued pursuant to each Indenture by the related Owner Trustee and authenticated by the Indenture Trustee thereunder, and any such Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture. "Series C Equipment Notes" means the 6.86% Series C Equipment Notes issued pursuant to each Indenture by the related Owner Trustee and authenticated by the Indenture Trustee thereunder, and any such Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture. "Series D Equipment Notes" means the 8.16% Series D Equipment Notes issued pursuant to each Indenture by the related Owner Trustee and authenticated by the Indenture Trustee thereunder, and any such Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture. "Series E Equipment Notes" means the 10.50% Series E Equipment Notes issued pursuant to the Indenture relating to certain of the Equipment (as specified in such Indenture) by the related Owner Trustee and authenticated by the Indenture Trustee thereunder, and any such Equipment Notes issued in exchange -18- 23 therefor or replacement thereof pursuant to the terms of such Indenture. "Spare Engine" means, with respect to each Indenture relating to Equipment Notes that are secured by a spare engine, the "Spare Engine" referred to therein. "Special Distribution Date" means, with respect to any Special Payment, the date chosen by the Subordination Agent pursuant to Section 2.4(a) for the distribution of such Special Payment in accordance with this Agreement; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. "Special Payment" means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture), including Overdue Scheduled Payments, payments in respect of the redemption or repurchase of any Equipment Note and payments in respect of the sale of any Equipment Note to the related Owner Trustee, Owner Participant or any other Person. "Special Payments Account" means the Eligible Deposit Account created pursuant to Section 2.2 as a sub-account to the Collection Account. "Standard & Poor's" means Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Stated Amount" with respect to any Liquidity Facility, means the Commitment (as defined in such Liquidity Facility) of the applicable Liquidity Provider thereunder. "Stated Interest Rate" means (i) with respect to the Class A Certificates, 6.85% per annum, (ii) with respect to the Class B Certificates, 6.93% per annum, and (iii) with respect to the Class C Certificates, 6.86% per annum. "Subordination Agent" has the meaning assigned to it in the preamble to this Agreement. "Tax" and "Taxes" mean any and all taxes, fees, levies, duties tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, loss, damage, liability, expense, additions to tax and additional amounts or costs incurred or imposed with respect thereto) imposed or otherwise assessed by the United States or by any state, local or foreign government (or any subdivision or agency thereof) or other taxing authority, including, without limitation: taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, -19- 24 payroll, employment, social security, workers, compensation, unemployment compensation, or net worth and similar charges; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, taxes on goods and services, gains taxes, license, registration and documentation fees, customs duties, tariffs, and similar charges. "Threshold Rating" means the short-term unsecured debt rating of P-1 by Moody's and A-1 by Standard & Poor's, provided that, in the event a person's short-term unsecured debt is not rated by either Moody's or Standard & Poor's, the long-term unsecured debt rating by Moody's and Standard & Poor's at least equal to the initial rating by each of Moody's and Standard & Poor's on the Class A Certificates. "Treasury Regulations" means regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations. "Triggering Event" means (x) the occurrence of an Indenture Default under all of the Indentures resulting in a PTC Event of Default with respect to the most senior Class of Certificates then Outstanding, (y) the Acceleration of, or a failure to pay at final maturity, all of the outstanding Equipment Notes or (z) the occurrence of an America West Bankruptcy Event. "Trust" means any of the Class A Trust, the Class B Trust, the Class C Trust, the Class D Trust or the Class E Trust. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a). "Trust Agreement" means any of the Class A Trust Agreement, Class B Trust Agreement, Class C Trust Agreement, Class D Trust Agreement or Class E Trust Agreement. "Trustee" means any of the Class A Trustee, the Class B Trustee, the Class C Trustee, the Class D Trustee or the Class E Trustee. "Trustee Incumbency Certificate" has the meaning assigned to such term in Section 2.5(a). "Trustee Representatives" has the meaning assigned to such term in Section 2.5(a). "Underwriters" means Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc. -20- 25 "Underwriting Agreement" means the Underwriting Agreement dated November 20, 1996, among the Underwriters, America West, GPA Group plc, GPA Leasing USA I, Inc. and GPA Leasing USA Sub I, Inc. relating to the purchase of the Certificates by the Underwriters, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Written Notice" means, from the Subordination Agent, any Trustee or any Liquidity Provider, a written instrument executed by the Designated Representative of such Person. An invoice delivered by a Liquidity Provider pursuant to Section 3.1 in accordance with its normal invoicing procedures shall constitute Written Notice under such Section. ARTICLE II TRUST ACCOUNTS; CONTROLLING PARTY SECTION 2.1 Agreement to Terms of Subordination; Payments from Monies Received Only. (a) Each Trustee hereby acknowledges and agrees to the terms of subordination set forth in this Agreement in respect of each Class of Certificates and agrees to enforce such provisions and cause all payments in respect of the Equipment Notes and the Liquidity Facilities to be applied in accordance with the terms of this Agreement. In addition, each Trustee hereby agrees to cause the Equipment Notes purchased by the related Trust to be registered in the name of the Subordination Agent, as agent and trustee for such Trustee, to be held in trust by the Subordination Agent solely for the purpose of facilitating the enforcement of the subordination and other provisions of this Agreement. (b) Except as otherwise expressly provided in the next succeeding sentence of this Section 2.1, all payments to be made by the Subordination Agent hereunder shall be made only from amounts received by it that constitute Scheduled Payments, Special Payments or payments under Sections 10 or 13 of the Leases or Section 21 of the Refunding Agreements, and only to the extent that the Subordination Agent shall have received sufficient income or proceeds therefrom to enable it to make such payments in accordance with the terms hereof. Each of the Trustees and the Subordination Agent hereby agrees and, as provided in each Trust Agreement, each Certificateholder, by its acceptance of a Certificate, and each Liquidity Provider, by entering into the Liquidity Facility to which it is a party, has agreed to look solely to such amounts to the extent available for distribution to it as provided in this Agreement and that none of the Trustees, Owner Trustees, Indenture Trustees, Owner Participants nor the Subordination Agent is personally liable to any of them for any amounts payable or any liability under this -21- 26 Agreement, any Trust Agreement, any Liquidity Facility or such Certificate, except (in the case of the Subordination Agent) as expressly provided herein or (in the case of the Trustees) as expressly provided in each Trust Agreement or (in the case of the Owner Trustees and the Indenture Trustees) as expressly provided in any Operative Agreement. SECTION 2.2 Trust Accounts. (a) Upon the execution of this Agreement, the Subordination Agent shall establish and maintain in its name (i) the Collection Account as an Eligible Deposit Account, bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Trustees, the Certificateholders and the Liquidity Providers and (ii) as a sub-account in the Collection Account, the Special Payments Account as an Eligible Deposit Account, bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Trustees, the Certificateholders and the Liquidity Providers. The Subordination Agent shall establish and maintain the Cash Collateral Accounts pursuant to and under the circumstances set forth in Section 3.6(f) hereof. Upon such establishment and maintenance under Section 3.6(f) hereof, the Cash Collateral Accounts shall, together with the Collection Account, constitute the "Trust Accounts" hereunder. (b) Funds on deposit in the Trust Accounts shall be invested and reinvested by the Subordination Agent in Eligible Investments selected by the Subordination Agent if such investments are reasonably available and have maturities no later than the earlier of (i) 90 days following the date of such investment and (ii) the Business Day immediately preceding the Regular Distribution Date or any then specified Special Distribution Date pursuant to Section 2.4 hereof, as the case may be, next following the date of such investment; provided, however, that following the making of a Downgrade Drawing, (i) the Subordination Agent shall invest and reinvest such amounts at the direction of the Liquidity Provider funding such Drawing and (ii) the Liquidity Provider funding such drawing shall use reasonable efforts to cause such amounts to be invested in Eligible Investments which yield at least an amount equal to the interest (excluding Margin) that is payable to such Liquidity Provider in respect of such amounts pursuant to Section 3.7 of the relevant Liquidity Facility (it being understood that it may not be feasible to obtain such a yield). Any Investment Earnings shall be deposited in the Collection Account when received by the Subordination Agent and shall be applied by the Subordination Agent in the same manner as the principal amount of such investment is to be applied and any losses shall be charged against the principal amount invested, in each case net of the Subordination Agent's reasonable fees and expenses in making such investments. The Subordination Agent shall not be liable for any loss resulting from any investment, reinvestment or liquidation -22- 27 required to be made under this Agreement other than by reason of its willful misconduct or gross negligence. Eligible Investments and any other investment required to be made hereunder shall be held to their maturities except that any such investment may be sold (without regard to its maturity) by the Subordination Agent without instructions whenever such sale is necessary to make a distribution required under this Agreement. Uninvested funds held hereunder shall not earn or accrue interest. (c) The Subordination Agent shall possess all right, title and interest in all funds on deposit from time to time in the Trust Accounts and in all proceeds thereof (including all income thereon, except as otherwise provided herein with respect to Investment Earnings). The Trust Accounts shall be held in trust by the Subordination Agent under the sole dominion and control of the Subordination Agent for the benefit of the Trustees, the Certificateholders and the Liquidity Providers, as the case may be. If, at any time, any of the Trust Accounts ceases to be an Eligible Deposit Account, the Subordination Agent shall within 10 Business Days (or such longer period, not to exceed 30 calendar days, to which each Rating Agency may consent) establish a new Collection Account, Special Payments Account or Cash Collateral Account, as the case may be, as an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Collection Account, Special Payments Account or Cash Collateral Account, as the case may be. Initially, the Trust Accounts shall be maintained with Fleet as Eligible Deposit Accounts. SECTION 2.3 Deposits to the Collection Account and Special Payments Account. (a) The Subordination Agent shall, upon receipt thereof, deposit in the Collection Account all Scheduled Payments received by it. (b) The Subordination Agent shall, on each date when one or more Special Payments are made to the Subordination Agent as holder of the Equipment Notes, deposit in the Special Payments Account the aggregate amount of such Special Payments. SECTION 2.4 Distributions of Special Payments. (a) Notice of Special Payment. Upon receipt by the Subordination Agent, as registered holder of the Equipment Notes, of any notice of a Special Payment (or, in the absence of any such notice, upon receipt by the Subordination Agent of a Special Payment), the Subordination Agent shall promptly give notice thereof to each Trustee and the Liquidity Providers. The Subordination Agent shall promptly calculate the amount of the redemption or purchase of Equipment Notes or the amount of any Overdue Scheduled Payment, as the case may be, comprising such Special Payment under the applicable Indenture or Indentures and shall promptly send to each Trustee a Written Notice of such amount and the amount allocable to each Trust. Such Written Notice shall also -23- 28 set the distribution date for such Special Payment (a "Special Distribution Date"), which shall be the first Business Day which follows the later to occur of (x) the 22nd day after the date such Written Notice is received by the Trustees or (y) the date the Subordination Agent receives or expects to receive such Special Payment. Amounts on deposit in the Special Payments Account shall be distributed in accordance with Sections 2.4(b) and 2.4(c) hereof, as applicable. (b) (i) Redemptions and Purchases of Equipment Notes. So long as no Triggering Event shall have occurred (whether or not continuing), the Subordination Agent shall make distributions pursuant to this Section 2.4(b) of amounts on deposit in the Special Payments Account on account of the redemption or purchase of all of the Equipment Notes issued pursuant to an Indenture on the Special Distribution Date for such Special Payment in the following order of priority: first, such amount as shall be required to pay (A) all accrued and unpaid Liquidity Expenses then in arrears plus (B) the product of (x) the aggregate amount of all accrued and unpaid Liquidity Expenses not in arrears to such Special Payment Date multiplied by (y) a fraction, the numerator of which is the aggregate outstanding principal amount of Equipment Notes being redeemed or purchased on such Special Payment Date and the denominator of which is the aggregate outstanding principal amount of all Equipment Notes, shall be distributed to the Liquidity Providers pari passu on the basis of the amount of Liquidity Expenses owed to each Liquidity Provider; second, such amount as shall be required to pay (A) all accrued and unpaid interest then in arrears on all Liquidity Obligations plus (B) the product of (x) the aggregate amount of all accrued and unpaid interest on all Liquidity Obligations not in arrears to such Special Payment Date (at the rate provided in the applicable Liquidity Facility) multiplied by (y) a fraction, the numerator of which is the aggregate outstanding principal amount of Equipment Notes being redeemed or purchased on such Special Payment Date and the denominator of which is the aggregate outstanding principal amount of all Equipment Notes, shall be distributed to the Liquidity Providers pari passu on the basis of the amount of Liquidity Obligations owed to each Liquidity Provider; third, such amount as shall be required (A) to pay or reimburse the Liquidity Providers in an amount equal to the amount of any unreimbursed Interest Drawings under the Liquidity Facilities shall be distributed to the Liquidity -24- 29 Providers or (B) if any Cash Collateral Account had previously been funded as provided in Section 3.6(f), to replenish such Cash Collateral Account up to its Required Amount shall be deposited in such Cash Collateral Account, in each such case, pari passu on the basis of the amounts of such unreimbursed Interest Drawings and/or deficiencies; fourth, such amount as shall be required to pay in full Expected Distributions to the holders of Class A Certificates on such Special Distribution Date shall be distributed to the Class A Trustee; fifth, such amount as shall be required to pay in full Expected Distributions to the holders of Class B Certificates on such Special Distribution Date shall be distributed to the Class B Trustee; sixth, such amount as shall be required to pay in full Expected Distributions to the holders of Class C Certificates on such Special Distribution Date shall be distributed to the Class C Trustee; seventh, such amount as shall be required to pay in full Expected Distributions to the holders of Class D Certificates on such Special Distribution Date shall be distributed to the Class D Trustee; eighth, such amount as shall be required to pay in full Expected Distributions to the holders of Class E Certificates on such Special Distribution Date shall be distributed to the Class E Trustee; and ninth, the balance, if any, of such Special Payment shall be transferred to the Collection Account for distribution in accordance with Section 3.2 hereof. (ii) Upon the occurrence of a Triggering Event (whether or not continuing), the Subordination Agent shall make distributions pursuant to this Section 2.4(b) of amounts on deposit in the Special Payments Account on account of the redemption or purchase of all of the Equipment Notes issued pursuant to an Indenture on the Special Distribution Date for such Special Payment in accordance with Section 3.3 hereof. (c) Other Special Payments. Any amounts on deposit in the Special Payments Account other than in respect of amounts to be distributed pursuant to Section 2.4(b) shall be distributed on the Special Distribution Date therefor in accordance with Article III hereof. (d) Investment of Amounts in Special Payments Account. Any amounts on deposit in the Special Payments Account prior to -25- 30 the distribution thereof pursuant to Section 2.4(b) or (c) shall be invested in accordance with Section 2.2(b). Investment Earnings on such investments shall be distributed in accordance with Section 2.4(b) or (c), as the case may be. SECTION 2.5 Designated Representatives. (a) With the delivery of this Agreement, the Subordination Agent shall furnish to each Liquidity Provider and each Trustee, and from time to time thereafter may furnish to each Liquidity Provider and each Trustee, at the Subordination Agent's discretion, or upon any Liquidity Provider's or Trustee's request (which request shall not be made more than one time in any 12-month period), a certificate (a "Subordination Agent Incumbency Certificate") of a Responsible Officer of the Subordination Agent certifying as to the incumbency and specimen signatures of the officers of the Subordination Agent and the attorney-in-fact and agents of the Subordination Agent (the "Subordination Agent Representatives") authorized to give Written Notices on behalf of the Subordination Agent hereunder. Until each Liquidity Provider and Trustee receives a subsequent Subordination Agent Incumbency Certificate, it shall be entitled to rely on the last Subordination Agent Incumbency Certificate delivered to it hereunder. (b) With the delivery of this Agreement, each Trustee shall furnish to the Subordination Agent, and from time to time thereafter may furnish to the Subordination Agent, at such Trustee's discretion, or upon the Subordination Agent's request (which request shall not be made more than one time in any 12- month period), a certificate (a "Trustee Incumbency Certificate") of a Responsible Officer of such Trustee certifying as to the incumbency and specimen signatures of the officers of such Trustee and the attorney-in-fact and agents of such Trustee (the "Trustee Representatives") authorized to give Written Notices on behalf of such Trustee hereunder. Until the Subordination Agent receives a subsequent Trustee Incumbency Certificate, it shall be entitled to rely on the last Trustee Incumbency Certificate delivered to it hereunder. (c) With the delivery of this Agreement, each Liquidity Provider shall furnish to the Subordination Agent, and from time to time thereafter may furnish to the Subordination Agent, at such Liquidity Provider's discretion, or upon the Subordination Agent's request (which request shall not be made more than one time in any 12-month period), a certificate (an "LP Incumbency Certificate") of any authorized signatory of such Liquidity Provider certifying as to the incumbency and specimen signatures of any officer, attorney-in-fact, agent or other designated representative of such Liquidity Provider (the "LP Representatives" and, together with the Trustee Representatives and the Subordination Agent Representatives, the "Designated Representatives") authorized to give Written Notices on behalf of such Liquidity Provider hereunder. Until the Subordination Agent -26- 31 receives a subsequent LP Incumbency Certificate, it shall be entitled to rely on the last LP Incumbency Certificate delivered to it hereunder. SECTION 2.6 Controlling Party. (a) The Trustees and the Liquidity Providers hereby agree that, with respect to any Indenture at any given time, the Indenture Trustee thereunder will be directed (i) in taking, or refraining from taking, any action with respect to such Indenture or the Equipment Notes issued thereunder, so long as no Indenture Default has occurred and is continuing thereunder, by the holders of at least a majority of the outstanding principal amount of such Equipment Notes (provided that, for so long as the Subordination Agent is the registered holder of the Equipment Notes, the Subordination Agent shall act with respect to this clause (i) in accordance with the directions of the Trustees representing holders of Certificates representing an undivided interest in such principal amount of Equipment Notes), and (ii) after the occurrence and during the continuance of an Indenture Default thereunder (which has not been cured by the applicable Owner Trustee or the applicable Owner Participant pursuant to Section 4.3 of such Indenture), in taking, or refraining from taking, any action with respect to such Indenture or such Equipment Notes, including exercising remedies thereunder (including accelerating the Equipment Notes issued thereunder or foreclosing the Lien on the Aircraft or Spare Engine securing such Equipment Notes), by the Controlling Party. (b) The Person who shall be the "Controlling Party" with respect to any Indenture shall be: (v) the Class A Trustee; (w) upon payment of Final Distributions to the holders of Class A Certificates, the Class B Trustee; (x) upon payment of Final Distributions to the holders of Class B Certificates, the Class C Trustee; (y) upon payment of Final Distributions to the holders of Class C Certificates, the Class D Trustee; and (z) upon payment of Final Distributions to the holders of Class D Certificates, the Class E Trustee. For purposes of giving effect to the foregoing, the Trustees (other than the Controlling Party) irrevocably agree (and the Certificateholders (other than the Certificateholders represented by the Controlling Party) shall be deemed to agree by virtue of their purchase of Certificates) that the Subordination Agent, as record holder of the Equipment Notes, shall exercise its voting rights in respect of the Equipment Notes as directed by the Controlling Party and any vote so exercised shall be binding upon the Trustees and all Certificateholders. The Subordination Agent shall give written notice to all of the other parties to this Agreement promptly upon a change in the identity of the Controlling Party. Each of the parties hereto agrees that it shall not exercise any of the rights of the Controlling Party at such time as it is not the Controlling Party -27- 32 hereunder; provided, however, that nothing herein contained shall prevent or prohibit any Non-Controlling Party from exercising such rights as shall be specifically granted to such Non-Controlling Party hereunder and under the other Operative Agreements. (c) Notwithstanding the foregoing, the Liquidity Provider with the then greatest amount of unreimbursed Liquidity Obligations payable to it under the Liquidity Facilities shall have the right to elect, by Written Notice to the Subordination Agent and each of the Trustees, to become the Controlling Party hereunder with respect to any Indenture at any time from and including the date which is 18 months after the earlier of (i) the Acceleration of the Equipment Notes under such Indenture and (ii) a Final Drawing with respect to the Liquidity Facilities, if, in the case of clause (i) or (ii) above, at the time of such election all Liquidity Obligations owed to such Liquidity Provider under the Liquidity Facilities have not been paid in full. (d) The exercise of remedies by the Controlling Party under this Agreement shall be expressly limited by Section 4.1(a)(ii) hereof. (e) The Controlling Party shall not be entitled to require or obligate any Non-Controlling Party to provide funds necessary to exercise any right or remedy hereunder. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED SECTION 3.1 Written Notice of Distribution. (a) No later than 3:00 P.M. (New York City time) on the Business Day immediately preceding each Distribution Date (or Special Distribution Date for purposes of Section 2.4(b) hereof, as the case may be), each of the following Persons shall deliver to the Subordination Agent a Written Notice setting forth the following information as at the close of business on such Business Day: (i) With respect to the Class A Certificates, the Class A Trustee shall separately set forth the amounts to be paid in accordance with clause "fourth" of Section 3.2 or Section 2.4(b), as the case may be, hereof; (ii) With respect to the Class B Certificates, the Class B Trustee shall separately set forth the amounts to be paid in accordance with clause "fifth" of Section 3.2 or Section 2.4(b), as the case may be, hereof; -28- 33 (iii) With respect to the Class C Certificates, the Class C Trustee shall separately set forth the amounts to be paid in accordance with clause "sixth" of Section 3.2 or Section 2.4(b), as the case may be, hereof; (iv) With respect to the Class D Certificates, the Class D Trustee shall separately set forth the amounts to be paid in accordance with clause "seventh" of Section 3.2 or Section 2.4(b), as the case may be, hereof; (v) With respect to the Class E Certificates, the Class E Trustee shall separately set forth the amounts to be paid in accordance with clause "eighth" of Section 3.2 or Section 2.4(b), as the case may be, hereof; and (vi) With respect to each Liquidity Facility, the Liquidity Provider thereunder shall separately set forth the amounts to be paid in accordance with clauses "first", "second" and "third" of Section 3.2 or Section 2.4(b), as the case may be, hereof. The notices required under this Section 3.1(a) may be in the form of a schedule or similar document provided to the Subordination Agent by the parties referenced therein or by any one of them, which schedule or similar document may state that, unless there has been a prepayment of the Certificates, such schedule or similar document is to remain in effect until any substitute notice or amendment shall be given to the Subordination Agent by the party providing such notice. (b) Following the occurrence of a Triggering Event, the Subordination Agent shall request the following information from the following Persons, and each of the following Persons shall, upon the request of the Subordination Agent, deliver a Written Notice to the Subordination Agent setting forth for such Person the following information: (i) With respect to the Class A Certificates, the Class A Trustee shall separately set forth the amounts to be paid in accordance with clauses "first" (relating to indemnity payments made by the Class A Certificateholders) and "sixth" of Section 3.3 hereof; (ii) With respect to the Class B Certificates, the Class B Trustee shall separately set forth the amounts to be paid in accordance with clauses "first" (relating to indemnity payments made by the Class B Certificateholders) and "seventh" of Section 3.3 hereof; (iii) With respect to the Class C Certificates, the Class C Trustee shall separately set forth the amounts to be -29- 34 paid in accordance with clauses "first" (relating to indemnity payments made by the Class C Certificateholders) and "eighth" of Section 3.3 hereof; (iv) With respect to the Class D Certificates, the Class D Trustee shall separately set forth the amounts to be paid in accordance with clauses "first" (relating to indemnity payments made by the Class D Certificateholders) and "ninth" of Section 3.3 hereof; (v) With respect to the Class E Certificates, the Class E Trustee shall separately set forth the amounts to be paid in accordance with clauses "first" (relating to indemnity payments made by the Class E Certificateholders) and "tenth" of Section 3.3 hereof; and (vi) With respect to each Liquidity Facility, the Liquidity Provider thereunder shall separately set forth the amounts to be paid in accordance with clauses "second", "third" and "fourth" of Section 3.3 hereof. (c) At such time as a Trustee or a Liquidity Provider shall have received all amounts owing to it (and, in the case of a Trustee, the Certificateholders for which it is acting) pursuant to Section 2.4, 3.2 or 3.3 hereof, as applicable, and, in the case of a Liquidity Provider, its commitment under the related Liquidity Facility shall have terminated or expired, such Person shall, by a Written Notice, so inform the Subordination Agent and each other party to this Agreement. (d) As provided in Section 6.5 hereof, the Subordination Agent shall be fully protected in relying on any of the information set forth in a Written Notice provided by any Trustee or any Liquidity Provider pursuant to paragraphs (a) through (c) above and shall have no independent obligation to verify, calculate or recalculate any amount set forth in any Written Notice delivered in accordance with such paragraphs. (e) Any Written Notice delivered by a Trustee or a Liquidity Provider, as applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if made prior to 10:00 A.M. (New York City time) shall be effective on the date delivered (or if delivered later on a given date shall be effective as of the next Business Day). Subject to the terms of this Agreement, the Subordination Agent shall as promptly as practicable comply with any such instructions; provided, however, that any transfer of funds pursuant to any instruction received after 10:00 A.M. (New York City time) on any Business Day may be made on the next succeeding Business Day. -30- 35 (f) In the event the Subordination Agent shall not receive from any Person any information set forth in paragraphs (a) or (b) above which is required to enable the Subordination Agent to make a distribution to such Person pursuant to Section 2.4(b), 3.2 or 3.3 hereof, the Subordination Agent shall request such information and, failing to receive any such information, the Subordination Agent shall not make such distribution(s) to such Person. In such event, the Subordination Agent shall make distributions pursuant to clauses "first" through "eighth" of Section 2.4(b), clauses "first" through "ninth" of Section 3.2 and clauses "first" through "tenth" of Section 3.3 to the extent it shall have sufficient information to enable it to make such distributions, and shall continue to hold any funds remaining, after making such distributions, until the Subordination Agent shall receive all necessary information to enable it to distribute any funds so withheld. (g) On such dates (but not more frequently than monthly) as any Liquidity Provider or any Trustee shall request, the Subordination Agent shall send to such party a written statement reflecting all amounts on deposit with the Subordination Agent pursuant to Section 3.1(f) hereof. SECTION 3.2 Distribution of Amounts on Deposit in the Collection Account. Except as otherwise provided in Sections 2.4, 3.1(f), 3.3, 3.4 and 3.6(b), amounts on deposit in the Collection Account (or, in the case of any amount described in Section 2.4(c), on deposit in the Special Payments Account) shall be promptly distributed on each Distribution Date in the following order of priority and in accordance with the information provided to the Subordination Agent pursuant to Section 3.1(a) hereof: first, such amount as shall be required to pay all accrued and unpaid Liquidity Expenses owed to each Liquidity Provider shall be distributed to the Liquidity Providers pari passu on the basis of the amount of Liquidity Expenses owed to each Liquidity Provider; second, such amount as shall be required to pay in full the aggregate amount of interest accrued on all Liquidity Obligations (at the rate provided in the applicable Liquidity Facility) shall be distributed to the Liquidity Providers pari passu on the basis of the amount of Liquidity Obligations owed to each Liquidity Provider; third, such amount as shall be required (A) to pay or reimburse the Liquidity Providers in an amount equal to the amount of all Liquidity Obligations then due (other than amounts payable pursuant to clause "first" or "second" of this Section 3.2) shall be distributed to the Liquidity -31- 36 Providers, and (B) if any Cash Collateral Account had previously been funded as provided in Section 3.6(f), to replenish such Cash Collateral Account up to its Required Amount shall be deposited in such Cash Collateral Account, in each such case, pari passu on the basis of the amounts of such unreimbursed Liquidity Obligations and/or deficiencies; fourth, such amount as shall be required to pay in full Expected Distributions to the holders of the Class A Certificates on such Distribution Date shall be distributed to the Class A Trustee; fifth, such amount as shall be required to pay in full Expected Distributions to the holders of the Class B Certificates on such Distribution Date shall be distributed to the Class B Trustee; sixth, such amount as shall be required to pay in full Expected Distributions to the holders of the Class C Certificates on such Distribution Date shall be distributed to the Class C Trustee; seventh, such amount as shall be required to pay in full Expected Distributions to the holders of the Class D Certificates on such Distribution Date shall be distributed to the Class D Trustee; eighth, such amount as shall be required to pay in full Expected Distributions to the holders of the Class E Certificates on such Distribution Date shall be distributed to the Class E Trustee; and ninth, such amount as shall be required to pay in full the aggregate unpaid amount of fees and expenses payable as of such Distribution Date to the Subordination Agent and each Trustee pursuant to the terms of this Agreement and the Trust Agreements, as the case may be, shall be distributed to the Subordination Agent and such Trustee. SECTION 3.3 Distribution of Amounts on Deposit Following a Triggering Event. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b) hereof, upon the occurrence of a Triggering Event and at all times thereafter, all funds in the Collection Account or the Special Payments Account shall be promptly distributed by the Subordination Agent in the following order of priority: first, such amount as shall be required to reimburse (i) the Subordination Agent for any out-of-pocket costs and expenses actually incurred by it (to the extent not previously reimbursed) in the protection of, or the realization of the value of, the Equipment Notes or any -32- 37 Trust Indenture Estate, shall be applied by the Subordination Agent in reimbursement of such costs and expenses, (ii) each Trustee for any amounts of the nature described in clause (i) above actually incurred by it under the applicable Trust Agreement (to the extent not previously reimbursed), shall be distributed to such Trustee and (iii) any Liquidity Provider or Certificateholder for payments, if any, made by it to the Subordination Agent or any Trustee in respect of amounts described in clause (i) above, shall be distributed to such Liquidity Provider or to the applicable Trustee for the account of such Certificateholder, in each such case, pari passu on the basis of all amounts described in clauses (i) through (iii) above; second, such amount remaining as shall be required to pay all accrued and unpaid Liquidity Expenses shall be distributed to each Liquidity Provider pari passu on the basis of the amount of Liquidity Expenses owed to each Liquidity Provider; third, such amount remaining as shall be required to pay accrued and unpaid interest on the Liquidity Obligations as provided in the Liquidity Facilities shall be distributed to each Liquidity Provider pari passu on the basis of the amount of such accrued and unpaid interest owed to each Liquidity Provider; fourth, such amount remaining as shall be required (A) to pay in full the outstanding amount of all Liquidity Obligations, whether or not then due (other than amounts payable pursuant to clause "second" or "third" of this Section 3.3) shall be distributed to each Liquidity Provider that has not funded a Cash Collateral Account in accordance with Section 3.6(c) or 3.6(i) hereof, and/or (B) if applicable, so long as no Performing Note Deficiency exists and no Liquidity Event of Default has occurred and is continuing, to replenish the Cash Collateral Accounts up to their respective Required Amounts shall be deposited in the Cash Collateral Accounts, in each case, pari passu on the basis of the amount of Liquidity Obligations owed to each Liquidity Provider and/or such deficiencies; fifth, such amount as shall be required to reimburse or pay (i) the Subordination Agent for any Tax (other than Taxes imposed on compensation paid hereunder), expense, fee, charge or other loss incurred by or any other amount payable to the Subordination Agent in connection with the transactions contemplated hereby (to the extent not previously reimbursed), shall be applied by the Subordination Agent in reimbursement of such amount, (ii) each Trustee for any Tax (other than Taxes imposed on compensation paid under the applicable Trust Agreement), -33- 38 expense, fee, charge, loss or any other amount payable to such Trustee under the applicable Trust Agreements (to the extent not previously reimbursed), shall be distributed to such Trustee and (iii) each Certificateholder for payments, if any, made by it pursuant to Section 5.2 hereof in respect of amounts described in clause (i) above, shall be distributed to the applicable Trustee for the account of such Certificateholder, in each such case, pari passu on the basis of all amounts described in clauses (i) through (iii) above; sixth, such amount remaining as shall be required to pay in full Adjusted Expected Distributions on the Class A Certificates shall be distributed to the Class A Trustee; seventh, such amount remaining as shall be required to pay in full Adjusted Expected Distributions on the Class B Certificates shall be distributed to the Class B Trustee; eighth, such amount remaining as shall be required to pay in full Adjusted Expected Distributions on the Class C Certificates shall be distributed to the Class C Trustee; ninth, such amount remaining as shall be required to pay in full Adjusted Expected Distributions on the Class D Certificates shall be distributed to the Class D Trustee; and tenth, such amount remaining as shall be required to pay in full Adjusted Expected Distributions on the Class E Certificates shall be distributed to the Class E Trustee. SECTION 3.4 Other Payments. Any payments received by the Subordination Agent for which no provision as to the application thereof is made in this Agreement shall be distributed by the Subordination Agent in the order of priority specified in Section 3.3 hereof. SECTION 3.5 Payments to the Trustees and the Liquidity Providers. Any amounts distributed hereunder to any Liquidity Provider shall be paid to such Liquidity Provider by wire transfer of funds to the address such Liquidity Provider shall provide to the Subordination Agent. The Subordination Agent shall provide a Written Notice of any such transfer to the applicable Liquidity Provider, as the case may be, at the time of such transfer. Any amounts distributed hereunder by the Subordination Agent to any Trustee which shall not be the same institution as the Subordination Agent shall be paid to such Trustee by wire transfer funds at the address such Trustee shall provide to the Subordination Agent. -34- 39 SECTION 3.6 Liquidity Facilities. (a) Interest Drawings. If on any Distribution Date, after giving effect to the subordination provisions of this Agreement, the Subordination Agent shall not have sufficient funds for the payment of any amounts due and owing in respect of accrued interest on the Class A Certificates, the Class B Certificates or the Class C Certificates (at the Stated Interest Rate for such Class of Certificates), then, prior to 12:00 noon (New York City time) on the Business Day following such Distribution Date, the Subordination Agent shall request a drawing (each such drawing, an "Interest Drawing") under the Liquidity Facility with respect to such Class of Certificates in an amount equal to the lesser of (i) an amount sufficient to pay the amount of such accrued interest (at the Stated Interest Rate for such Class of Certificates) and (ii) the Available Amount under such Liquidity Facility, and shall pay such amount to the Trustee with respect to such Class of Certificates in payment of such accrued interest. (b) Application of Interest Drawings. Notwithstanding anything to the contrary contained in this Agreement, (i) all payments received by the Subordination Agent in respect of an Interest Drawing under the Class A Liquidity Facility and all amounts withdrawn by the Subordination Agent from the Class A Cash Collateral Account, and payable in each case to the Class A Certificateholders, shall be promptly distributed to the Class A Trustee, (ii) all payments received by the Subordination Agent in respect of an Interest Drawing under the Class B Liquidity Facility and all amounts withdrawn by the Subordination Agent from the Class B Cash Collateral Account, and payable in each case to the Class B Certificateholders, shall be promptly distributed to the Class B Trustee and (iii) all payments received by the Subordination Agent in respect of an Interest Drawing under the Class C Liquidity Facility and all amounts withdrawn by the Subordination Agent from the Class C Cash Collateral Account, and payable in each case to the Class C Certificateholders, shall be promptly distributed to the Class C Trustee. (c) Downgrade Drawings. If at any time the debt rating of any Liquidity Provider issued by either Rating Agency is lower than the applicable Threshold Rating, within 30 days after receiving notice of such downgrading (but no later than the expiration date of the Liquidity Facility issued by the downgraded Liquidity Provider (the "Downgraded Facility")), such Liquidity Provider may arrange, or the Subordination Agent (in consultation with America West (whose recommendations the Subordination Agent will accept)) may arrange, for a Replacement Liquidity Provider to issue and deliver a Replacement Liquidity Facility to the Subordination Agent. If a Downgraded Facility has not been replaced in accordance with the terms of this paragraph, the Subordination Agent shall, on such 30th day (or if -35- 40 such 30th day is not a Business Day, on the next succeeding Business Day) (or, if earlier, the expiration date of such Downgraded Facility), request a drawing in accordance with and to the extent permitted by such Downgraded Facility (such drawing, a "Downgrade Drawing") of all available and undrawn amounts thereunder. Amounts drawn pursuant to a Downgrade Drawing shall be maintained and invested as provided in Section 3.6(f) hereof. (d) [Reserved.] (e) Issuance of Replacement Liquidity Facility. At any time, the Subordination Agent may, at its option, in consultation with America West (whose recommendations the Subordination Agent will accept), arrange for a Replacement Liquidity Facility to replace the Liquidity Facility for any Class of Certificates; provided that the initial Liquidity Provider may not be replaced pursuant to this paragraph unless (i) there shall have become due to the initial Liquidity Provider amounts pursuant to Section 3.1, 3.2 or 3.3 of the Liquidity Facilities and the replacement of the initial Liquidity Provider would reduce or eliminate the obligation to pay such amounts, (ii) it shall become unlawful or impossible for the initial Liquidity Provider (or its Lending Office) to maintain or fund its LIBOR Advances as described in Section 3.10 of each Liquidity Facility or (iii) a Downgrade Drawing shall have occurred under any Liquidity Facility. In any such consultation, the Subordination Agent shall accept the recommendations of America West in the absence of a good faith reason not to do so. If such Replacement Liquidity Facility is provided at any time after a Downgrade Drawing has been made, all funds on deposit in the relevant Cash Collateral Account will be returned to the Liquidity Provider being replaced. No such Replacement Liquidity Facility executed in connection therewith shall become effective and no such Replacement Liquidity Facility shall be deemed a "Liquidity Facility" under the Operative Agreements, unless and until (i) the conditions referred to in the immediately following paragraph shall have been satisfied and (ii) if such Replacement Liquidity Facility shall materially adversely affect the rights, remedies, interests or obligations of the Class A Certificate- holders, the Class B Certificateholders or the Class C Certificateholders under any of the Operative Agreements, the applicable Trustee shall have consented, in writing, to the execution and issuance of such Replacement Liquidity Facility. In connection with the issuance of each Replacement Liquidity Facility, the Subordination Agent shall (x) prior to the issuance of such Replacement Liquidity Facility, receive written confirmation from each Rating Agency that such Replacement Liquidity Facility will not cause a reduction, withdrawal or suspension of the rating then in effect for any Class of Certificates by such Rating Agency (without regard to the ratings of any Liquidity Provider being replaced pursuant to -36- 41 Section 3.6(c) hereof), (y) pay all Liquidity Obligations then owing to the replaced Liquidity Provider (which payment shall be made first from available funds in the Cash Collateral Account as described in clause (vii) of Section 3.6(f) hereof and thereafter from any other available source, including, without limitation, a drawing under the Replacement Liquidity Facility, it being understood that no Replacement Liquidity Facility shall become effective (other than insofar as necessary to permit the repayment of amounts owed to the replaced Liquidity Provider) until all amounts owed to the replaced Liquidity Provider have been paid) and (z) cause the issuer of the Replacement Liquidity Facility to deliver the Replacement Liquidity Facility to the Subordination Agent, together with a legal opinion opining that such Replacement Liquidity Facility is an enforceable obligation of such Replacement Liquidity Provider. Upon satisfaction of the conditions set forth in this Section 3.6(e), (i) the replaced Liquidity Facility shall terminate and (ii) such Replacement Liquidity Provider shall be deemed to be a Liquidity Provider with the rights and obligations of a Liquidity Provider hereunder and under the other Operative Agreements and such Replacement Liquidity Facility shall be deemed to be a Liquidity Facility hereunder and under the other Operative Agreements. (f) Cash Collateral Accounts; Withdrawals; Investments. In the event the Subordination Agent shall draw all available amounts under the Class A Liquidity Facility, the Class B Liquidity Facility or the Class C Liquidity Facility pursuant to Section 3.6(c) or a Final Drawing shall be made as provided in the Liquidity Facility, amounts so drawn shall be deposited by the Subordination Agent in the Class A Cash Collateral Account, the Class B Cash Collateral Account or the Class C Cash Collateral Account, respectively. Amounts so deposited shall be invested in Eligible Investments in accordance with Section 2.2(b) hereof. Investment Earnings on amounts on deposit in the Cash Collateral Accounts shall be deposited in the Collection Account. In addition, from and after the date funds are so deposited, the Subordination Agent shall make withdrawals from such account as follows: (i) on each Distribution Date, the Subordination Agent shall, to the extent it shall not have received funds to pay accrued and unpaid interest on the Class A Certificates (at the Stated Interest Rate for the Class A Certificates) from any other source, withdraw from the Class A Cash Collateral Account, and pay to the Class A Trustee an amount equal to the lesser of (x) an amount necessary to pay accrued and unpaid interest (at the Stated Interest Rate for the Class A Certificates) on such Class A Certificates and (y) the amount on deposit in the Class A Cash Collateral Account; -37- 42 (ii) on each Distribution Date, the Subordination Agent shall, to the extent it shall not have received funds to pay accrued and unpaid interest on the Class B Certificates (at the Stated Interest Rate for the Class B Certificates) from any other source, withdraw from the Class B Cash Collateral Account, and pay to the Class B Trustee an amount equal to the lesser of (x) an amount necessary to pay accrued and unpaid interest (at the Stated Interest Rate for the Class B Certificates) on such Class B Certificates and (y) the amount on deposit in the Class B Cash Collateral Account; (iii) on each Distribution Date, the Subordination Agent shall, to the extent it shall not have received funds to pay accrued and unpaid interest on the Class C Certificates (at the Stated Interest Rate for the Class C Certificates) from any other source, withdraw from the Class C Cash Collateral Account, and pay to the Class C Trustee an amount equal to the lesser of (x) an amount necessary to pay accrued and unpaid interest (at the Stated Interest Rate for the Class C Certificates) on such Class C Certificates and (y) the amount on deposit in the Class C Cash Collateral Account; (iv) on each date on which the Pool Balance of the Class A Trust shall have been reduced by payments made to the Class A Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall withdraw from the Class A Cash Collateral Account such amount as is necessary so that, after giving effect to the reduction of the Pool Balance on such date (including any such reduction resulting from a prior withdrawal of amounts on deposit in the Class A Cash Collateral Account on such date), the Required Amount (with respect to the Class A Liquidity Facility) will be on deposit in the Class A Cash Collateral Account and shall first, pay such amount to the Class A Liquidity Provider until the Liquidity Obligations (with respect to the Class A Certificates) shall have been paid in full, and second, deposit any remaining amount in the Collection Account; (v) on each date on which the Pool Balance of the Class B Trust shall have been reduced by payments made to the Class B Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall withdraw from the Class B Cash Collateral Account such amount as is necessary so that, after giving effect to the reduction of the Pool Balance on such date (including any such reduction resulting from a prior withdrawal of amounts on deposit in the Class B -38- 43 Cash Collateral Account on such date), the Required Amount (with respect to the Class B Liquidity Facility) will be on deposit in the Class B Cash Collateral Account and shall first, pay such amount to the Class B Liquidity Provider until the Liquidity Obligations (with respect to the Class B Certificates) shall have been paid in full, and second, deposit any remaining amount in the Collection Account; (vi) on each date on which the Pool Balance of the Class C Trust shall have been reduced by payments made of the Class C Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall withdraw from the Class C Cash Collateral Account such amount as is necessary so that, after giving effect to the reduction of the Pool Balance on such date (including any such reduction resulting from a prior withdrawal of amounts on deposit in the Class C Cash Collateral Account on such date), the Required Amount (with respect to the Class C Liquidity Facility) will be on deposit in the Class C Cash Collateral Account and shall first, pay such amount to the Class C Liquidity Provider until the Liquidity Obligations (with respect to the Class C Certificates) shall have been paid in full, and second, deposit any remaining amount in the Collection Account; (vii) if a Replacement Liquidity Facility for any Class of Certificates shall be delivered to the Subordination Agent following the date on which funds have been deposited into the Cash Collateral Account for such Class of Certificates, the Subordination Agent shall withdraw all amounts on deposit in such Cash Collateral Account and shall pay such amounts to the replaced Liquidity Provider until all Liquidity Obligations owed to such Person shall have been paid in full, and shall deposit any remaining amount in the Collection Account; and (viii) following the payment of Final Distributions with respect to any Class of Certificates (other than the Class D and Class E Certificates), on the date on which the Subordination Agent shall have been notified by the Liquidity Provider for such Class of Certificates that the Liquidity Obligations owed to such Liquidity Provider have been paid in full, the Subordination Agent shall withdraw all amounts on deposit in the Cash Collateral Account in respect of such Class of Certificates and shall deposit such amount in the Collection Account. -39- 44 (g) Reinstatement. With respect to any Interest Drawing under the Liquidity Facility for any Trust, upon the reimbursement of the applicable Liquidity Provider for all or any part of the amount of such Interest Drawing, together with any accrued interest thereon, the Available Amount of such Liquidity Facility shall be reinstated by an amount equal to the amount so reimbursed to the applicable Liquidity Provider; provided, however, that such Liquidity Facility shall not be so reinstated in part or in full at any time if (x) both (i) a Triggering Event shall have occurred and (ii) a Performing Note Deficiency exists or (y) a Liquidity Event of Default shall have occurred and be continuing under such Liquidity Facility. In the event that at any time prior to both the occurrence of a Triggering Event and the existence of a Performing Note Deficiency funds are withdrawn from any Cash Collateral Account pursuant to clauses (i), (ii) or (iii) of Section 3.6(f) hereof, then funds received by the Subordination Agent prior to both the occurrence of a Triggering Event and the existence of a Performing Note Deficiency shall be deposited in such Cash Collateral Account as provided in clause "third" of Section 2.4(b)(i), clause "third" of Section 3.2 or clause "fourth" of Section 3.3, as applicable, and applied in accordance with Section 3.6(f) hereof. (h) Reimbursement. The amount of each drawing under the Liquidity Facilities shall be due and payable, together with interest thereon, on the dates and at the rates, respectively, provided in the Liquidity Facilities. (i) Final Drawing. If any action is expressly required under a Liquidity Facility to be taken by the Subordination Agent in order to make a Final Drawing thereunder, the Subordination Agent shall not fail to take such action. Upon receipt of the proceeds of a Final Drawing under the related Liquidity Facility, the Subordination Agent shall maintain and invest such proceeds in accordance with Section 3.6(f) hereof. (j) Reduction of Stated Amount. Promptly following each date on which the Required Amount of the Liquidity Facility for a Class of Certificates is reduced as a result of a distribution to the Certificateholders of such Class of Certificates, the Subordination Agent shall, if such Liquidity Facility provides for reductions of the Stated Amount of such Liquidity Facility and if such reductions are not automatic, request the Liquidity Provider for such Class of Certificates to reduce such Stated Amount to an amount equal to the Required Amount with respect to such Liquidity Facility (as calculated by the Subordination Agent after giving effect to such payment). Each such request shall be made in accordance with the provisions of the applicable Liquidity Facility. (k) Relation to Subordination Provisions. Interest Drawings under the Liquidity Facilities and withdrawals from the -40- 45 Cash Collateral Accounts, in each case, in respect of interest on the Certificates of any Class, will be distributed to the Trustee for such Class of Certificates, notwithstanding Sections 2.4(b), 3.2, and 3.3 hereof. ARTICLE IV EXERCISE OF REMEDIES SECTION 4.1 Directions from the Controlling Party. (a) (i) Following the occurrence and during the continuation of an Indenture Default under any Indenture, the Controlling Party shall direct the Indenture Trustee under such Indenture in the exercise of remedies available to the holders of the Equipment Notes issued pursuant to such Indenture, including, without limitation, the ability to vote all such Equipment Notes in favor of declaring all of the unpaid principal amount of such Equipment Notes and accrued interest thereon to be due and payable under, and in accordance with, the provisions of such Indenture. Subject to the Owner Trustees' and the Owner Participants' rights set forth in the Indentures to purchase the Equipment Notes, if the Equipment Notes issued pursuant to any Indenture have been Accelerated following an Indenture Default with respect thereto, the Controlling Party may, on the terms and conditions set forth in such Indenture, direct the related Trustee to sell, assign, contract to sell or otherwise dispose of and deliver all (but not less than all) of such Equipment Notes to any Person at public or private sale, at any location at the option of the Controlling Party, all upon such terms and conditions as it may reasonably deem advisable in accordance with applicable law. (ii) Subject to the Owner Trustees' and the Owner Participants' rights set forth in the Indentures to purchase the Equipment Notes, and notwithstanding the foregoing, so long as any Certificates remain Outstanding, during the period ending on the date which is nine months after the earlier of (x) the Acceleration of the Equipment Notes issued pursuant to any Indenture or (y) the occurrence of an America West Bankruptcy Event, without the consent of each Trustee, (A) no Aircraft or Spare Engine subject to the Lien of such Indenture or such Equipment Notes may be sold if the net proceeds from such sale would be less than the Minimum Sale Price for such Aircraft, Spare Engine or such Equipment Notes, and (B) the amount and payment dates of rentals payable by America West under the Lease for such Aircraft or Spare Engine may not be adjusted if, as a result of such adjustment, the discounted present value of all such rentals would be less than 75% of the discounted present value of the rentals payable by America West under such Lease before giving effect to such adjustment, in each case, using the weighted average interest rate of the Equipment Notes then outstanding pursuant to such Indenture as the discount rate. -41- 46 (iii) At the request of the Controlling Party, the Subordination Agent may from time to time during the continuance of an Indenture Default (and before the occurrence of a Triggering Event) commission LTV Appraisals with respect to the related Aircraft or Spare Engine. (iv) After a Triggering Event occurs and any Equipment Note becomes a Non-Performing Equipment Note, the Subordination Agent shall obtain LTV Appraisals for each Aircraft and Spare Engine as soon as practicable and additional LTV Appraisals on or prior to each anniversary of the date of such initial LTV Appraisals; provided that, if the Controlling Party reasonably objects to the appraised value of the Aircraft or Spare Engine shown in any such LTV Appraisals, the Controlling Party shall have the right to obtain or cause to be obtained substitute LTV Appraisals (including any LTV Appraisals based upon physical inspection of the Aircraft or Spare Engine). (b) The Controlling Party shall take such actions as it may reasonably deem most effectual to complete the sale or other disposition of such Aircraft, Spare Engine or Equipment Notes. In addition, in lieu of any sale, assignment, contract to sell or other disposition, the Subordination Agent, on behalf of the Controlling Party, may maintain possession of such Equipment Notes and continue to apply monies received in respect of such Equipment Notes in accordance with Article III hereof. In addition, in lieu of such sale, assignment, contract to sell or other disposition, or in lieu of such maintenance of possession, the Controlling Party may instruct the Indenture Trustee under such Indenture to foreclose on the Lien on the related Aircraft or Spare Engine or to take any other remedial action permitted under such Indenture or applicable law. SECTION 4.2 Remedies Cumulative. Each and every right power and remedy given to the Trustees, the Controlling Party or the Subordination Agent specifically or otherwise in this Agreement shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may, subject always to the terms and conditions hereof, be exercised from time to time and as often and in such order as may be deemed expedient by any Trustee, the Controlling Party or the Subordination Agent, as appropriate, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by any Trustee, the Controlling Party or the Subordination Agent in the exercise of any right, remedy or power or in the pursuit of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default or to be an acquiescence therein. -42- 47 SECTION 4.3 Discontinuance of Proceedings. In case any party to this Agreement (including the Controlling Party in such capacity) shall have instituted any Proceeding to enforce any right, power or remedy under this Agreement by foreclosure, entry or otherwise, and such Proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Person instituting such Proceeding, then and in every such case each such party shall, subject to any determination in such proceedings, be restored to its former position and rights hereunder, and all rights, remedies and powers of such party shall continue as if no such Proceedings had been instituted. SECTION 4.4 Right of Certificateholders to Receive Payments Not to Be Impaired. Anything in this Agreement to the contrary notwithstanding but subject to each Trust Agreement, the right of any Certificateholder or any Liquidity Provider, respectively, to receive payments pursuant to Section 2.4, 3.2 or 3.3 hereof when due, or to institute suit for the enforcement of any such payment on or after the applicable Distribution Date, shall not be impaired or affected without the consent of such Certificateholder or such Liquidity Provider, respectively. SECTION 4.5 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement or in any suit against any Controlling Party or the Subordination Agent for any action taken or omitted by it as Controlling Party or Subordination Agent, as the case may be, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys, fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. The provisions of this Section do not apply to a suit instituted by the Subordination Agent, a Liquidity Provider or a Trustee or a suit by Certificateholders holding more than 10% of the original principal amount of any Class of Certificates. SECTION 4.6 No Action Contrary to America West's Rights Under the Lease. Notwithstanding any of the provisions of this Agreement to the contrary, each of the parties hereto agrees for the benefit of America West that it will not take any action contrary to America West's rights under any Lease, including the right of America West to possession and use and quiet enjoyment of the Equipment subject to such Lease, except in accordance with the provisions of such Lease. -43- 48 ARTICLE V DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC. SECTION 5.1 Notice of Indenture Default or Triggering Event, Etc. (a) In the event the Subordination Agent shall have actual knowledge of the occurrence of an Indenture Default or a Triggering Event, as promptly as practicable, and in any event within 10 days after obtaining knowledge thereof, the Subordination Agent shall transmit by mail to the Rating Agencies, the Liquidity Providers and the Trustees notice of such Indenture Default or Triggering Event, unless such Indenture Default or Triggering Event shall have been cured or waived. For all purposes of this Agreement, in the absence of actual knowledge on the part of a Responsible officer, the Subordination Agent shall not be deemed to have knowledge of any Indenture Default or Triggering Event unless notified in writing by one or more Trustees, one or more Liquidity Providers or one or more Certificateholders. (b) Other Notices. The Subordination Agent will furnish to each Liquidity Provider and Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Subordination Agent as registered holder of the Equipment Notes or otherwise in its capacity as Subordination Agent to the extent the same shall not have been required to be directly distributed to such Liquidity Provider or Trustee, as applicable, pursuant to the express provision of any other Operative Agreement. (c) Determinations and Notice. The Subordination Agent agrees to make the determinations and notifications required to be made by it pursuant to Section 2.02 of each Indenture. SECTION 5.2 Indemnification. The Subordination Agent shall not be required to take any action or refrain from taking any action under Section 5.1 (other than the first sentence thereof) or Article IV hereof unless the Subordination Agent shall have been indemnified (to the extent and in the manner reasonably satisfactory to the Subordination Agent) against any liability, cost or expense (including counsel fees and expenses) which may be incurred in connection therewith. The Subordination Agent shall not be under any obligation to take any action under this Agreement and nothing contained in this Agreement shall require the Subordination Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity -44- 49 against such risk or liability is not reasonably assured to it. The Subordination Agent shall not be required to take any action under Section 5.1 (other than the first sentence thereof) or Article IV hereof, nor shall any other provision of this Agreement be deemed to impose a duty on the Subordination Agent to take any action, if the Subordination Agent shall have been advised by counsel that such action is contrary to the terms hereof or is otherwise contrary to law. SECTION 5.3 No Duties Except as Specified in Intercreditor Agreement. The Subordination Agent shall not have any duty or obligation to take or refrain from taking any action under, or in connection with, this Agreement, except as expressly provided by the terms of this Agreement; and no implied duties or obligations shall be read into this Agreement against the Subordination Agent. The Subordination Agent agrees that it will, in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.1 hereof) promptly take such action as may be necessary to discharge duly all Liens on any of the Trust Accounts or any monies deposited therein which result from claims against it in its individual capacity not related to its activities hereunder or any other Operative Agreement. SECTION 5.4 Notice from the Liquidity Providers and Trustees. If a Responsible Officer of any Liquidity Provider or Trustee has notice of an Indenture Default or a Triggering Event, such Liquidity Provider or Trustee, as the case may be, shall promptly give notice thereof to all other Liquidity Providers and Trustees and to the Subordination Agent, provided, however, that no such Person shall have any liability hereunder as a result of its failure to deliver any such notice. ARTICLE VI THE SUBORDINATION AGENT SECTION 6.1 Authorization; Acceptance of Trusts and Duties. Each of the Class A Trustee, Class B Trustee and Class C Trustee hereby designates and appoints the Subordination Agent as the agent and trustee of such Trustee under the applicable Liquidity Facility and authorizes the Subordination Agent to enter into the applicable Liquidity Facility as agent and trustee for such Trustee. Each of the Liquidity Providers and the Trustees hereby designates and appoints the Subordination Agent as the Subordination Agent under this Agreement. Fleet National Bank hereby accepts the duties hereby created and applicable to it as the Subordination Agent and agrees to perform the same but only upon the terms of this Agreement and agrees to receive and disburse all monies received -45- 50 by it in accordance with the terms hereof. The Subordination Agent shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence) and (b) for liabilities that may result from the material inaccuracy of any representation or warranty of the Subordination Agent made in its individual capacity in any Operative Agreement. The Subordination Agent shall not be liable for any error of judgment made in good faith by a Responsible officer of the Subordination Agent, unless it is proved that the Subordination Agent was grossly negligent in ascertaining the pertinent facts. SECTION 6.2 Absence of Duties. The Subordination Agent shall have no duty to see to any recording or filing of this Agreement or any other document, or to see to the maintenance of any such recording or filing. SECTION 6.3 No Representations or Warranties as to Documents. The Subordination Agent in its individual capacity does not make nor shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Agreement or any other Operative Agreement or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Subordination Agent, made in its individual capacity, under any Operative Agreement to which it is a party. The Certificateholders, the Trustees and the Liquidity Providers make no representation or warranty hereunder whatsoever. SECTION 6.4 No Segregation of Monies; No Interest. Any monies paid to or retained by the Subordination Agent pursuant to any provision hereof and not then required to be distributed to any Trustee or any Liquidity Provider as provided in Articles II and III hereof need not be segregated in any manner except to the extent required by such Articles II and III and by law, and the Subordination Agent shall not (except as otherwise provided in Section 2.2 hereof) be liable for any interest thereon; provided, however, that any payments received or applied hereunder by the Subordination Agent shall be accounted for by the Subordination Agent so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.5 Reliance; Agents; Advice of Counsel. The Subordination Agent shall not incur liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. As to the Pool Balance of any Trust as of any date, the Subordination Agent may for all purposes hereof rely on a certificate signed by any -46- 51 Responsible Officer of the applicable Trustee, and such certificate shall constitute full protection to the Subordination Agent for any action taken or omitted to be taken by it in good faith in reliance thereon. As to any fact or matter relating to the Liquidity Providers or the Trustees the manner of ascertainment of which is not specifically described herein, the Subordination Agent may for all purposes hereof rely on a certificate, signed by any Responsible Officer of the applicable Liquidity Provider or Trustee, as the case may be, as to such fact or matter, and such certificate shall constitute full protection to the Subordination Agent for any action taken or omitted to be taken by it in good faith in reliance thereon. The Subordination Agent shall assume, and shall be fully protected in assuming, that each of the Liquidity Providers and each of the Trustees are authorized to enter into this Agreement and to take all action to be taken by them pursuant to the provisions hereof, and shall not inquire into the authorization of each of the Liquidity Providers and each of the Trustees with respect thereto. In the administration of the trusts hereunder, the Subordination Agent may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Subordination Agent shall not be liable for the acts or omissions of any agent appointed with due care or for anything done, suffered or omitted in good faith by it in accordance with the advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.6 Capacity in Which Acting. The Subordination Agent acts hereunder solely as agent and trustee herein and not in its individual capacity, except as otherwise expressly provided in the Operative Agreements. SECTION 6.7 Compensation. The Subordination Agent shall be entitled to reasonable compensation, including expenses and disbursements, for all services rendered hereunder and shall have a priority claim to the extent set forth in Article III hereof on all monies collected hereunder for the payment of such compensation, to the extent that such compensation shall not be paid by others. The Subordination Agent agrees that it shall have no right against any Trustee or Liquidity Provider for any fee as compensation for its services as agent under this Agreement. The provisions of this Section 6.7 shall survive the termination of this Agreement. SECTION 6.8 May Become Certificateholder. The institution acting as Subordination Agent hereunder may become a Certificateholder and have all rights and benefits of a Certificateholder to the same extent as if it were not the institution acting as the Subordination Agent. -47- 52 SECTION 6.9 Subordination Agent Required; Eligibility. There shall at all times be a Subordination Agent hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $100,000,000 (or the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State thereof or of the District of Columbia and having a combined capital and surplus of at least $100,000,000), if there is such an institution willing and able to perform the duties of the Subordination Agent hereunder upon reasonable or customary terms. Such corporation shall be a citizen of the United States and shall be authorized under the laws of the United States or any State thereof or of the District of Columbia to exercise corporate trust powers and shall be subject to supervision or examination by federal, state or District of Columbia authorities. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of any of the aforesaid supervising or examining authorities, then, for the purposes of this Section 6.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Subordination Agent shall cease to be eligible in accordance with the provisions of this Section, the Subordination Agent shall resign immediately in the manner and with the effect specified in Section 8.1. SECTION 6.10 Money to Be Held in Trust. All Equipment Notes, monies and other property deposited with or held by the Subordination Agent pursuant to this Agreement shall be held in trust for the benefit of the parties entitled to such Equipment Notes, monies and other property. All such Equipment Notes, monies or other property shall be held in the Trust Department of the institution acting as Subordination Agent hereunder. ARTICLE VII INDEMNIFICATION AND REIMBURSEMENT OF SUBORDINATION AGENT SECTION 7.1 Scope of Indemnification and Reimbursement. The Subordination Agent shall be indemnified hereunder to the extent and in the manner described in Sections 10 and 13 of the Leases and shall be reimbursed for expenses to the extent and in the manner described in Section 21 of the Refunding Agreements. The indemnities or rights to reimbursement for expenses contained in such Sections of the Leases and the Refunding Agreements shall survive the termination of this Agreement. -48- 53 ARTICLE VIII SUCCESSOR SUBORDINATION AGENT SECTION 8.1 Replacement of Subordination Agent; Appointment of Successor. The Subordination Agent may resign at any time by so notifying the Trustees and the Liquidity Providers. The Liquidity Provider or the Controlling Party (or, prior to the occurrence of a Triggering Event, the Person who would be the Controlling Party if a Triggering Event had occurred) may remove the Subordination Agent for cause by so notifying the Subordination Agent and may appoint a successor Subordination Agent. The Controlling Party (or, prior to the occurrence of a Triggering Event, the Person who would be the Controlling Party if a Triggering Event had occurred) shall remove the Subordination Agent if: (1) the Subordination Agent fails to comply with Section 6.9 hereof; (2) the Subordination Agent is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Subordination Agent or its property; or (4) the Subordination Agent otherwise becomes incapable of acting. If the Subordination Agent resigns or is removed or if a vacancy exists in the office of Subordination Agent for any reason (the Subordination Agent in such event being referred to herein as the retiring Subordination Agent), the Controlling Party (or, prior to the occurrence of a Triggering Event, the Person who would be the Controlling Party if a Triggering Event had occurred) shall promptly appoint a successor Subordination Agent. Any corporation into which the Subordination Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Subordination Agent shall be a party, or any corporation to which substantially all the corporate trust business of the Subordination Agent may be transferred, shall, subject to the terms of Section 6.9 hereof, be the Subordination Agent hereunder and under the other Operative Agreements to which the Subordination Agent is a party without further act, except that such Person shall give prompt subsequent notice of such transaction to the Liquidity Provider and each Trustee. -49- 54 A successor Subordination Agent shall deliver a written acceptance of its appointment as Subordination Agent hereunder to the retiring Subordination Agent, upon which the resignation or removal of the retiring Subordination Agent shall become effective, and the successor Subordination Agent shall have all the rights, powers and duties of the Subordination Agent under this Agreement. The successor Subordination Agent shall mail a notice of its succession to the Liquidity Providers and the Trustees. The retiring Subordination Agent shall promptly transfer its rights under each of the Liquidity Facilities and all of the property held by it as Subordination Agent to the successor Subordination Agent. If a successor Subordination Agent does not take office within 60 days after the retiring Subordination Agent resigns or is removed, the retiring Subordination Agent or one or more of the Trustees may petition any court of competent jurisdiction for the appointment of a successor Subordination Agent. If the Subordination Agent fails to comply with Section 6.9 hereof (to the extent applicable), one or more of the Trustees or one or more of the Liquidity Providers may petition any court of competent jurisdiction for the removal of the Subordination Agent and the appointment of a successor Subordination Agent. Notwithstanding the foregoing, no resignation or removal of the Subordination Agent shall be effective unless and until a successor has been appointed. No appointment of a successor Subordination Agent shall be effective unless and until the Rating Agencies shall have delivered a Ratings Confirmation. ARTICLE IX SUPPLEMENTS AND AMENDMENTS SECTION 9.1 Amendments, Waivers, Etc. (a) This Agreement may not be supplemented, amended or modified without the consent of each Trustee (acting with the consent of holders of Certificates of the related Class evidencing interests in the related Trust aggregating not less than a majority in interest in such Trust), the Subordination Agent and each Liquidity Provider; provided, however, that this Agreement may be supplemented, amended or modified without the consent of any Trustee if such supplement or amendment cures an ambiguity or inconsistency or does not materially adversely affect such Trustee or the holders of the related Class of Certificates. Notwithstanding the foregoing, without the consent of each Certificateholder and each Liquidity Provider, no supplement, amendment or modification of this Agreement may (i) reduce the percentage of the interest in any Trust evidenced by the Certificates issued by such Trust -50- 55 necessary to consent to modify or amend any provision of this Agreement or to waive compliance therewith or (ii) modify Section 2.4, 3.2 or 3.3 hereof, relating to the distribution of monies received by the Subordination Agent hereunder from the Equipment Notes or pursuant to the Liquidity Facilities. Nothing contained in this Section shall require the consent of a Trustee at any time following the payment of Final Distributions with respect to the related Class of Certificates. (b) In the event that the Subordination Agent, as the registered holder of any Equipment Notes, receives a request for its consent to any amendment, modification or waiver under such Equipment Notes, the Indenture pursuant to which such Equipment Notes were issued, or the Lease, Refunding Agreement or other related document, (i) if no Indenture Default shall have occurred and be continuing, the Subordination Agent shall request instructions with respect to each Series of Equipment Notes from the Trustee of the Trust which holds such Equipment Notes and shall vote or consent in accordance with the instructions of such Trustee and (ii) if any Indenture Default (which has not been cured by the applicable Owner Trustee or the applicable Owner Participant pursuant to such Indenture) shall have occurred and be continuing with respect to such Indenture, the Subordination Agent will exercise its voting rights as directed by the Controlling Party; provided that no such amendment, modification or waiver shall, without the consent of each Liquidity Provider, reduce the amount of rent, supplemental rent or stipulated loss values payable by the lessee under the Lease. SECTION 9.2 Subordination Agent Protected. If, in the reasonable opinion of the institution acting as the Subordination Agent hereunder, any document required to be executed pursuant to the terms of Section 9.1 affects any right, duty, immunity or indemnity with respect to it under this Agreement or any Liquidity Facility, the Subordination Agent may in its discretion decline to execute such document. SECTION 9.3 Effect of Supplemental Agreements. Upon the execution of any amendment or supplement hereto pursuant to the provisions hereof, this Agreement shall be and be deemed to be and shall be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Agreement of the parties hereto and beneficiaries hereof shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental agreement shall be and be deemed to be and shall be part of the terms and conditions of this Agreement for any and all purposes. In executing or accepting any supplemental agreement permitted by this Article IX, the Subordination Agent shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel (as defined in the Trust -51- 56 Agreements) stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. SECTION 9.4 Notice to Rating Agencies. Promptly following its receipt of each amendment, consent, modification, supplement or waiver contemplated by this Article IX, the Subordination Agent shall send a copy thereof to each Rating Agency. ARTICLE X MISCELLANEOUS SECTION 10.1 Termination of Intercreditor Agreement. Following payment of Final Distributions with respect to each Class of Certificates and the payment in full of all Liquidity obligations to the Liquidity Providers and provided that there shall then be no other amounts due to the Certificateholders, the Trustees, the Liquidity Providers and the Subordination Agent hereunder or under the Trust Agreements, and that the commitment of the Liquidity Providers under the Liquidity Facilities shall have expired or been terminated, this Agreement and the trusts created hereby shall terminate and this Agreement shall be of no further force or effect. Except as aforesaid or otherwise provided, this Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.2 Intercreditor Agreement for Benefit of Trustees, Liquidity Providers and Subordination Agent. Nothing in this Agreement, whether express or implied, shall be construed to give to any Person other than,the Trustees, the Liquidity Providers and the Subordination Agent any legal or equitable right, remedy or claim under or in respect of this Agreement. SECTION 10.3 Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Agreement to be made, given, furnished or filed shall be in writing, mailed by certified mail, postage prepaid, or by confirmed telecopy and (i) if to the Subordination Agent, addressed to at its office at: Fleet National Bank 777 Main Street Hartford, CT 06115 Attention: Corporate Trust Administration Telecopy: (860) 986-7920 -52- 57 (ii) if to any Trustee, addressed to it at its office at: Fleet National Bank 777 Main Street Hartford, CT 06115 Attention: Corporate Trust Administration Telecopy: (860) 986-7920 (iii) if to any Liquidity Provider, addressed to it at its office at: Kredietbank N.V. New York Branch 125 West 55th Street New York, NY 10019 Attention: General Manager Telecopy: (212) 956-5580 Whenever any notice in writing is required to be given by any Trustee or Liquidity Provider or the Subordination Agent to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Agreement. SECTION 10.4 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.5 No Oral Modifications or Continuing Waivers. No terms or provisions of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought and any other party or other Person whose consent is required pursuant to this Agreement and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 10.6 Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the successors and assigns of each, all as herein provided. -53- 58 SECTION 10.7 Headings. The headings of the various Articles and Sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.8 Counterpart Form. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same agreement. SECTION 10.9 Subordination. (a) As between the Liquidity Providers, on the one hand, and the Trustees and the Certificateholders, on the other hand, this Agreement shall be a subordination agreement for purposes of Section 510 of the United States Bankruptcy Code, as amended from time to time. (b) Notwithstanding the provisions of this Agreement, if prior to the payment in full to the Liquidity Providers of all Liquidity Obligations then due and payable, any party hereto shall have received any payment or distribution in respect of Equipment Notes or any other amount under the Indentures or other Operative Agreements which, had the subordination provisions of this Agreement been properly applied to such payment, distribution or other amount, would not have been distributed to such Person, then such payment, distribution or other amount shall be received and held in trust by such Person and paid over or delivered to the Subordination Agent for application as provided herein. (c) If any Trustee, any Liquidity Provider or the Subordination Agent receives any payment in respect of any obligations owing hereunder (or, in the case of the Liquidity Providers, in respect of the Liquidity Obligations), which is subsequently invalidated, declared preferential, set aside and/or required to be repaid to a trustee, receiver or other party, then, to the extent of such payment, such obligations (or, in the case of the Liquidity Providers, such Liquidity Obligations) intended to be satisfied shall be revived and continue in full force and effect as if such payment had not been received. (d) The Trustees (on behalf of themselves and the holders of Certificates), the Liquidity Providers and the Subordination Agent confirm that the payment priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all circumstances (including to the payment of any sum which would have accrued but for the commencement of any applicable insolvency proceeding), notwithstanding the fact that the obligations owed to the Trustees and the holders of Certificates are secured by certain assets and the Liquidity Obligations are not so secured. The Trustees expressly agree (on behalf of themselves and the holders of Certificates) not to assert priority over the holders of -54- 59 Liquidity Obligations due to their status as secured creditors in any bankruptcy, insolvency or other legal proceeding. (e) Each of the Trustees (on behalf of themselves and the holders of Certificates), the Liquidity Providers and the Subordination Agent may take any of the following actions without impairing its rights under this Agreement: (i) obtain a lien on any property to secure any amounts owing to it hereunder, including, in the case of the Liquidity Providers, the Liquidity Obligations, (ii) obtain the primary or secondary obligation of any other obligor with respect to any amounts owing to it hereunder, including, in the case of the Liquidity Providers, any of the Liquidity Obligations, (iii) renew, extend, increase, alter or exchange any amounts owing to it hereunder, including, in the case of the Liquidity Providers, any of the Liquidity Obligations, or release or compromise any obligation of any obligor with respect thereto, (iv) refrain from exercising any right or remedy, or delay in exercising such right or remedy, which it may have, or (v) take any other action which might discharge a subordinated party or a surety under applicable law. SECTION 10.10 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -55- 60 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written, and acknowledge that this Agreement has been made and delivered in the City of New York, and this Agreement has become effective only upon such execution and delivery. FLEET NATIONAL BANK, not in its individual capacity but solely as Trustee for each of the Trusts By______________________________ Name: Title: KREDIETBANK N.V., NEW YORK BRANCH, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider By_______________________________ Name: Title: By_______________________________ Name: Title: FLEET NATIONAL BANK, not in its individual capacity except as expressly set forth herein but solely as Subordination Agent and Trustee By_______________________________ Name: Title: -56- 61 SCHEDULE 1 TO INTERCREDITOR AGREEMENT Indentures Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and The Chase Manhattan Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and The Chase Manhattan Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and The Chase Manhattan Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee First Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and The Chase Manhattan Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-14] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-15] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee 62 First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-16] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E2] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E3] dated as of November 26, 1996 between Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee -2- 63 SCHEDULE 2 TO INTERCREDITOR AGREEMENT Refunding Agreements Refunding Agreement [GPA 1989 BN-5] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Chrysler Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1989 BN-6] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Chrysler Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1989 BN-10] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Chrysler Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1989 BN-12] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, not 64 in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1990 AWA-13] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1990 AWA-14] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1990 AWA-15] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1990 AWA-16] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, not in its -2- 65 individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1991 AWA-E1] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1990 AWA-E2] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee, Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee Refunding Agreement [GPA 1990 AWA-E3] dated as of November 20, 1996 among America West Airlines, Inc., as Lessee, GPA Leasing USA I, Inc., as Original Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its individual capacity except as expressly provided therein but solely as Owner Trustee Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner Participant, Fleet National Bank, as Subordination Agent, and Fleet National Bank, not in its individual capacity except as expressly provided therein but solely as Indenture Trustee -3- EX-4.11 12 FORM OF REFUNDING AGREEMENT[GPA 1989 BN-5] 1 Exhibit 4.11 REFUNDING AGREEMENT [GPA 1989 BN-5] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements [----------------------------------], as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and THE CHASE MANHATTAN BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 55 Registration No. N624AW Leased by America West Airlines, Inc. 2 TABLE OF CONTENTS Page SECTION 1. Purchase of Equipment Notes; Refunding..................... 7 SECTION 2. Equipment Notes............................................ 10 SECTION 3. Conditions Precedent....................................... 10 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee............................................... 18 SECTION 5. Amendment and Restatement of the First Amended and Restated Indenture................................................. 21 SECTION 6. Amendment and Restatement of the First and Restated Lease.. 22 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc............................................. 22 SECTION 8. Representations and Warranties of the Lessee............... 22 SECTION 9. Representations and Warranties............................. 27 SECTION 10. Transfer of Owner Participant's Interest................... 43 SECTION 11. Re-Registration of the Aircraft............................ 46 SECTION 12. Quiet Enjoyment............................................ 50 SECTION 13. Liens...................................................... 51 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant................... 53 SECTION 15. Certain Retained Rights and Releases....................... 56 SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee..................................... 62 SECTION 17. Lessee Protection of Title................................. 62 SECTION 18. Jurisdictional and Related Matters......................... 62 SECTION 19. Limitation on Recourse..................................... 64 - i - 3 Page ---- SECTION 20. Notices.................................................... 64 SECTION 21. Expenses................................................... 64 SECTION 22. Reliance of Liquidity Provider............................. 65 SECTION 23. Miscellaneous.............................................. 65 SECTION 24. Governing Law.............................................. 67 SECTION 25. Effectiveness.............................................. 67 Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Schedule IV OP SLV Amount Schedule V GPA SLV Amount Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1989 BN-5] REFUNDING AGREEMENT [GPA 1989 BN-5] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) [____________________], a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the four separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, FG Unity Leasing Co., Ltd., a Japanese limited purpose corporation (the "Japanese Lessor") and Air Tara Caymans I, Limited, a Cayman Islands corporation wholly-owned by the Parent Guarantor ("GPA Offshore"), entered into the Agreement to Purchase and Lease [GPA 1989 BN-5], dated as of September 22, 1989 among GPA Offshore, the Parent Guarantor, Barclays Bank plc, a public limited company organized under the laws of England and acting through its Tokyo branch (the "Japanese Lender") and the Japanese Lessor (the "Agreement to Purchase and Lease"), pursuant to which, among other things, GPA Offshore agreed to sell to Japanese Lessor, and Japanese Lessor agreed to purchase from GPA Offshore, the Aircraft (as defined below) on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Participation Agreement (as defined below), the Japanese Lessor and GPA Offshore entered into the Japanese Lease Agreement 5 [GPA 1989 BN-5] dated as of September 22, 1989, as supplemented by Lease Supplement No. 1, dated September 25, 1989 (the "Japanese Lease Supplement") (as so supplemented, the "Japanese Lease") pursuant to which the Japanese Lessor agreed to lease to GPA Offshore (in its capacity as lessee thereunder, together with its successors and assigns, the "Japanese Lessee"), and GPA Offshore agreed to lease from the Japanese Lessor, the Aircraft; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, GPA Offshore and the Grand Cayman branch of the Japanese Lender (the "Defeasance Bank") entered into two Assumption Agreements, dated as of September 22, 1989, for Yen payments and Pounds Sterling payments, respectively (as amended, modified or supplemented from time to time in accordance with the terms thereof and of the Operative Documents, collectively, the "Assumption Agreements"), pursuant to which the Defeasance Bank assumed certain of the obligations of GPA Offshore under the Japanese Lease for certain rent, termination and deficiency payments to be made thereunder (the portion thereof so assumed being herein called the "Defeased Payments" and the Yen portion thereof not so assumed being herein called the "Undefeased Yen Amount") in consideration of the unconditional and irrevocable payment to it by GPA Offshore of the agreed amounts set forth therein; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor delivered to the Japanese Lessor the Japanese Lease Guaranty dated as of September 22, 1989 (the "Japanese Lease Guaranty"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Defeasance Bank and the Japanese Lessor entered into two Confirmations and Agreements, dated as of September 22, 1989 for Yen payments and Pounds Sterling payments, respectively, (as amended, modified, or supplemented from time to time in accordance with the terms thereof and of the Operative Documents, collectively, the "Confirmation and Agreement"), pursuant to which the Defeasance Bank agreed to undertake directly with the Japanese Lessor to make the Defeased Payments under the Japanese Lease; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Japanese Lessor and GPA Offshore entered into the Supplemental Agreement dated as of September 22, 1989 (the "Supplemental Agreement") pursuant to which the Japanese Lessor agreed with GPA Offshore that the Japanese Lessor's interest in the Aircraft shall be subject and subordinate to the security interest of the Indenture Trustee, and that the Japanese Lessor shall relinquish to the Indenture Trustee any proceeds of a disposition of the Aircraft in the case of a foreclosure proceeding; - 2 - 6 WHEREAS, concurrently with the execution and delivery of the Participation Agreement, GPA Offshore and the Owner Trustee entered into a Lease Assignment, dated as of September 22, 1989 ("Japanese Lease Assignment") pursuant to which GPA Offshore assigned to the Owner Trustee all of its right, title and interest (but not any of its obligations) in the Aircraft, the Japanese Lease, the Japanese Lease Supplement, the Assumption Agreement, the Confirmation and Agreement, the Supplemental Agreement, the Omnibus Agreement, the FUYO Guaranty, and GPA Offshore remained solely liable for its obligations under the Japanese Lease; WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Manufacturers Hanover Trust Company, as Lender (the "Lender"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1989 BN-5], dated as of September 22, 1989 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one Airbus A320-231 aircraft (the "Aircraft"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1989 BN-5], dated as of September 22, 1989, as supplemented by Trust Indenture Supplement No. 1 [GPA 1989 BN-5], dated September 25, 1989 (as so supplemented, the "Original Indenture"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-5], dated as of September 22, 1989, as supplemented by Lease Supplement [GPA 1989 BN-5] No. 1 dated September 25, 1989 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1989 BN-5] dated as of September 22, 1989 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1989 BN-5], - 3 - 7 dated as of September 22, 1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-5] No. 1 dated September 25, 1989, and as further supplemented by Trust Agreement Supplement [GPA 1989 BN-5] No. 2 dated October 24, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1989 BN-5], dated as of September 22, 1989 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); WHEREAS, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1989 BN-5] dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1989 BN-5] dated September 28, 1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-5] dated as of June 25, 1991 and Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989 BN-5] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1989 BN-5] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of the Original Head Lessee under Section 21(f) of the Sublease; WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1989 BN-5], dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease and Sublessee Consent and Agreement [GPA 1989 BN-5] dated as of September 21, 1990, as amended by Amendment No. 1 to Assignment of Sublease and Sublessee Consent - 4 - 8 and Agreement [GPA 1989 BN-5] dated as of October 1, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, in connection with the Term Refunding (as defined in the Participation Agreement), the Original Head Lessee, the Parent Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee entered into Amendment No. 1 to Participation Agreement [GPA 1989 BN-5], dated as of October 1, 1991 ("PA Amendment No. 1"); WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Trustee and the Indenture Trustee entered into the Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5], dated as of October 1, 1991, as supplemented by Trust Indenture Supplement No. 2 [GPA 1989 BN-5], dated October 24, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Indenture"); WHEREAS, pursuant to the First Amended and Restated Indenture, the Owner Trustee issued equipment trust certificates substantially in the form set forth in Exhibit C thereof (the "Original Certificates") to the holders thereof (the "Original Certificate Holders") as evidence of the indebtedness then being made by the Owner Trustee to refinance a portion of the purchase price of the Aircraft; WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Trustee and the Original Head Lessee entered into the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5], dated as of October 1, 1991, as supplemented by Lease Supplement [GPA 1989 BN-5] No. 2, dated October 24, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Lease"); WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Participant and the Original Head Lessee entered into the Amended and Restated Head Lease Tax Indemnification Agreement [GPA 1989 BN-5], dated as of October 1, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Head Lease TIA"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will further amend and restate the First Amended and Restated Indenture as the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 3 dated the Restatement Date (the "Second Amended and Restated Indenture" and, the First Amended - 5 - 9 and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in four series, the proceeds from the issuance and sale of which will be applied in part to the redemption in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the First Amended and Restated Lease as the Second Amended and Restated Lease (as so amended and restated, the "Lease"); WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-5] No. 3 ("Trust Supplement No. 3"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Second Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the First Amended and Restated Head Lease TIA (as so amended and restated, the "Second Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, at the Closing, the Parent Guarantor and The Chase Manhattan Bank (the "Deposit Bank") will enter into the Yen Deposit Agreement ("Yen Deposit Agreement"), providing for the Parent Guarantor to place on deposit the Undefeased Yen Amount (as defined in the Yen Deposit Agreement) (the "Cash Deposit") with the Deposit Bank; WHEREAS, at the Closing, the Parent Guarantor and the Indenture Trustee will enter into the Yen Deposit Charge Agreement (the "Yen Deposit Charge Agreement") under which the Parent Guarantor shall charge and assign to the Indenture Trustee all of its right, title and interest in and to the Yen Deposit Agreement and the Cash Deposit to secure the Parent Guarantor's obligations under Section 15(h) of this Agreement; - 6 - 10 WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, four separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the - 7 - 11 Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates to but not including the Restatement Date plus an amount equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.16(b)(ii) of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xiii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to (A) the unpaid principal amount of the Original Certificates and (B) the amounts specified in clause (i)(B) of this Section 1 (collectively, the "Aggregate Redemption Amount"); (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the Aggregate Redemption Amount owing to them on the Restatement Date with respect to the Original Certificates as a redemption of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; (vi) the Parent Guarantor and the Deposit Bank shall enter into the Yen Deposit Agreement and the Parent Guarantor shall place the Cash Deposit with the Deposit Bank, and the Parent Guarantor and the Indenture Trustee shall enter into the Yen Deposit Charge Agreement securing the Parent Guarantor's obligations under Section 15(h) of this Agreement; (vii) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 3); (viii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (ix) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 3; - 8 - 12 (x) the Original Head Lessee and the Owner Participant shall enter into the Second Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (xi) the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" aircraft to the Lessee and the obligation of the Lessee to accept and lease such aircraft (the "Put Termination Agreement"); (xii) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xiii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. - 9 - 13 (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. - 10 - 14 (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (8): (1) this Agreement; (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; (3) Trust Supplement No. 3; (4) the Second Amended and Restated Indenture and Trust Indenture Supplement No. 3; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement); and (8) the Yen Deposit Agreement and the Yen Deposit Charge Agreement. (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such - 11 - 15 Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (1), (5) and (6) below, a certificate signed by an authorized officer of the Lessee and, in the case of (2), (3) and (4) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness and has a current, valid certificate of airworthiness; (2) the Second Aircraft FAA Bill of Sale (as defined in the Participation Agreement), the Original Lease, the First Amended and Restated Lease, the Original Indenture and the First Amended and Restated Indenture have each been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (3) Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, the Second Amended and Restated Indenture, Trust Indenture Supplement No. 3 and Trust Supplement No. 3 covering the Aircraft shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; (4) the Aircraft has been registered with the FAA in the name of the Owner Trustee; - 12 - 16 (5) the Lessee has authority to operate the Aircraft; and (6) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to - 13 - 17 execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; - 14 - 18 (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized officer of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President- Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Kelley Drye & Warren LLP, special counsel for the Indenture Trustee, and (ii) Shipman & Goodwin LLP, special counsel for the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Morgan, Lewis & Bockius LLP, special - 15 - 19 counsel for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Pass Through Trustee, the Owner Trustee and the Indenture Trustee each shall have received an opinion addressed to it from Freshfields, special English counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (r) The Original Head Lessee, the Lessee, GPA Leasing USA Sub I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (s) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Second Amended and Restated Head Lease TIA. - 16 - 20 (t) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. (u) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (v) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (w) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (x) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (y) The Owner Trustee shall have received a letter of credit in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the Lease. - 17 - 21 (z) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Second Amended and Restated Lease (including Lease Supplement No. 3) and the Second Amended and Restated Indenture (including Trust Indenture Supplement No. 3) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, the Second Amended and Restated Indenture, Trust Indenture Supplement No. 3 and Trust Supplement No. 3. Promptly following the execution and delivery of the Yen Deposit Charge Agreement (and in no event later than the deadline prescribed by law), the Parent Guarantor shall cause the prescribed particulars in respect of the Yen Deposit Charge Agreement and the Yen Deposit Charge Agreement itself to be delivered to the registrar of companies in the United Kingdom and Ireland for filing. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; (3) the Second Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; - 18 - 22 (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases and terminations as it may reasonably request; (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"); and (10) the Yen Deposit Agreement and the Yen Deposit Charge Agreement. (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and - 19 - 23 evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); - 20 - 24 (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the First Amended and Restated Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, - 21 - 25 authorizes and directs the Owner Trustee to execute and deliver the Second Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Second Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the Second Amended and Restated Indenture. The Second Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the First Amended and Restated Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the First Amended and Restated Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Second Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect on and after the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State - 22 - 26 of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the - 23 - 27 Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect, (B) the registration of the Aircraft pursuant to the Federal Aviation Act and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 3, the First Amended and Restated Indenture and Indenture Supplement - 24 - 28 No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment - 25 - 29 or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings do not involve any material danger to the sale, forfeiture or loss of the Aircraft; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; - 26 - 30 (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Aircraft under the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Aircraft. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a corporation duly incorporated, validly existing and in good standing under the laws of the State of New York, is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (as so defined, a "Citizen of the United States") (without making use of a voting trust, voting powers agreement or similar arrangement), will notify promptly all parties to this Agreement if in its reasonable opinion its status as a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement) is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Indenture promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement), and has the full corporate power, authority and legal right under the laws of the State of New York and the federal laws of the United States of America pertaining to its - 27 - 31 banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture, the Yen Deposit Charge Agreement and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1, the Yen Deposit Charge Agreement and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party have been duly authorized by the Indenture Trustee and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; (3) this Agreement constitutes, and the Indenture and the Yen Deposit Charge Agreement, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Yen Deposit Charge Agreement and the Operative Documents to which it is a party; (5) there are no Lenders' Liens (as defined in the Lease) on the Aircraft or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (6) it has possession of the chattel paper original counterpart of the Original Lease, the First Amended and Restated Lease, Lease Amendment No. 1 and the Second Amended and Restated Lease. - 28 - 32 (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 3, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors - 29 - 33 generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 3, the Original Indenture, the First Amended and Restated Indenture, the Indenture, the Original Lease, the First Amended and Restated Lease, Lease Amendment No. 1, the Lease, the Equipment Notes or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States of America governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of - 30 - 34 Delaware or any United States governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes, or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of Delaware or any political subdivision thereof in connection with the redemption of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of - 31 - 35 the instruments referred to in clauses (1), (2), (3) and (4) above; (10) both its chief executive office, and the place where its records concerning the Aircraft and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto; and (11) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Second Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust Supplement No. 3 have been duly authorized, executed and delivered by it; and this Agreement, the Trust Agreement, the SLV Letter Agreement and the Second Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Second Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or - 32 - 36 governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Second Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than the laws, rules or regulations relating to aircraft lease transactions generally or to the citizenship requirements of the Owner Participant under the Federal Aviation Act); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Second Amended and Restated Head Lease TIA; (5) neither the Owner Participant nor anyone authorized by it to act on its behalf (it being understood that in proposing, facilitating and otherwise taking any action in connection with the refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Equipment Notes or Certificates or any interest in and to the Trust Estate, the Trust Agreement or any similar interest for sale to, or - 33 - 37 solicited any offer to acquire any of the same from, more than ten Persons; the Owner Participant's interest in the Trust Estate and the Trust Agreement was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens); and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). If at any time Owner Participant has ceased to be, or shall have actual knowledge that it is likely to cease to be, such a citizen, and (i) the Aircraft shall be or would thereupon become ineligible for registration in the name of Owner Trustee under the Federal Aviation Act as in effect at such time (without regard to the "based and primarily used" provisions thereof) and the regulations then applicable thereunder, or (ii) the Aircraft is registered in a jurisdiction other than the United States of America, in circumstances in which the preceding clause (i) does not apply and the Lessee or any Permitted Sublessee at any time proposes to register the Aircraft in the United States of America, then Owner Participant shall (at its own expense and without any reimbursement or indemnification from the Lessee or any Permitted Sublessee) (A) immediately either (1) transfer in accordance with Section 10 hereof all of its right, title and interest in and to the Trust Agreement, the Trust Estate, this Agreement and the Second Amended and Restated Head Lease TIA or (2) take such other action, including, without limitation, the establishment of a voting trust or voting powers agreement (in which case Owner Participant shall remain the beneficial owner of the Trust Estate), as may be necessary to prevent the deregistration of the Aircraft under the Federal Aviation Act or to maintain such registration of the Aircraft or to make possible such registration of the Aircraft in the United States of America and to prevent Indenture Trustee, the Holders of the Equipment Notes, the Lessee or any Permitted Sublessee from being adversely affected as a result thereof and (B) indemnify the Lessee, the Indenture Trustee, the Holders of the Equipment Notes and any Permitted Sublessee, from and against any and all Claims incurred or suffered as a result of Owner - 34 - 38 Participant's failure to be such a citizen or loss of such citizenship, including, without limitation, as a result of the Aircraft's becoming ineligible or ceasing to remain eligible for such registration. (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument - 35 - 39 to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through - 36 - 40 Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this - 37 - 41 Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordina- tion Agent imposed by the State of Connecticut or any - 38 - 42 political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: - 39 - 43 (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Second Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; - 40 - 44 (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Aircraft free and clear of all Liens, except the rights of the parties to the Japanese Financing Documents, the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Aircraft, and Permitted Liens under the Original Lease; (7) [intentionally omitted]; and (8) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 3, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall - 41 - 45 have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement, the Yen Deposit Agreement and the Yen Deposit Charge Agreement (collectively, the "Parent Guarantor Transaction Documents"); each Parent Guarantor Transaction Document has been duly authorized, and upon the execution and delivery thereof, will constitute, the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement and each of the other Parent Guarantor Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or - 42 - 46 by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement and each of the other Parent Guarantor Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement or any other Parent Guarantor Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty in Section 9(f)(8) shall be only for the benefit of Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by consolidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom; provided that, subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and - 43 - 47 each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank or other financial institution with a combined capital, surplus and undivided profits of at least $60,000,000, or a corporation whose consolidated tangible net worth is at least $60,000,000, exclusive of goodwill, all of the foregoing determined in accordance with U.S. generally accepted accounting principles, (B) any wholly-owned subsidiary of such bank, financial institution or corporation if such bank, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) an Affiliate or a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such Affiliate's or subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and does not violate clause (viii) below; provided that if such Transferee is an Affiliate of Owner Participant, such notice may be given promptly following rather than prior to such transfer; (iii) upon giving effect to such transfer, such Transferee is a Citizen of the United States, and such Transferee shall deliver to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an affidavit to such effect; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; - 44 - 48 (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not and will not involve, either directly or indirectly, the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA that would cause a violation of any provision of ERISA or the imposition of an excise tax under the Code; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, a freight transporter, any Person engaged in the business of parcel transport by air, or a subsidiary or an Affiliate thereof; (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Second Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to - 45 - 49 which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Aircraft previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Second Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Second Amended and Restated Head Lease TIA by or against Owner Participant which have been made prior to the date of such transfer. The transferor Owner Participant shall pay all expenses of each party hereto related to any such transfer. Owner Participant covenants and warrants that it shall not transfer all or any portion of its interest in the Trust Estate except in accordance with this Section 10 and that it shall not itself, or direct Owner Trustee to, take any action in contravention of the Lessee's rights under the Lease except in accordance with the provisions of the Lease. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (7) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. The Lessee shall have no obligation to prevent any such deregistration or assist in maintaining or otherwise enhancing the Aircraft's eligibility for registration by restricting the use of the Aircraft. SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee agrees, that if the Owner Participant consents thereto, which consent shall not be unreasonably withheld, at any time after the Restricted Use Period, Lessee may, in connection with effecting a Permitted Sublease elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit C hereto (or such other country as the Owner Participant approves) (each, an "Eligible Country") and (b) the following conditions are met: (i) unless the country of registry is Taiwan, the United States of America maintains normal diplomatic relations with the country of registry of the Aircraft, and if the country of registry is Taiwan, the United - 46 - 50 States of America maintains diplomatic relations at least as good as those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner Participant and the Indenture Trustee shall have received favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably acceptable to the Owner Participant to the effect of the following and as to such other matters as the Owner Participant may reasonably request: (A) the Owner Trustee's ownership interest in the Aircraft and interest in the Lease and any Permitted Sublease shall be recognized under the laws of such Eligible Country, (B) the obligations of Lessee, and the rights and remedies of the Owner Trustee, under the Lease shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such Eligible Country (or the laws of the jurisdiction to which the laws of such Eligible Country would refer as the applicable governing law), (C) after giving effect to such change in registration, the Lien of the Indenture on the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and any Permitted Sublease shall continue as a valid and duly perfected security interest and all filing, recording or other action necessary to protect the same shall have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording or other action is necessary and (2) the Owner Trustee and the Indenture Trustee shall have received a certificate from Lessee that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be delivered to the Owner Trustee and the Indenture Trustee on or prior to the effective date of such change in registration), (D) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Owner Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate thereof), as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such Eligible Country, - 47 - 51 (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such Eligible Country (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), (F) (unless Lessee shall have agreed, or pursuant to the Lease shall have been required, to provide insurance covering the risk of requisition of use of such Aircraft by the government of such Eligible Country so long as such Aircraft is registered under the laws of such Eligible Country) the laws of such jurisdiction require fair compensation by the government of such Eligible Country payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use, (G) upon such change in registration, under the laws of such Eligible Country, any import or export permits necessary to take the Aircraft into or out of such Eligible Country and any foreign exchange or other like permits or approvals necessary to allow all "basic rent", "renewal rent" and casualty value payments provided for in such Permitted Sublease, which are obtainable at the commencement of such Permitted Sublease, will be in full force and effect, (H) under the Laws of such Eligible Country, the remedies set forth in such Permitted Sublease are effective to enable Lessee or its assignee as sublessor to repossess, subject to compliance with applicable Law in such Eligible Country in connection therewith, the Aircraft following a valid termination thereof, and there is no provision of such Laws which by its terms would prevent Lessee or its assignee as sublessor, upon compliance with the provisions of applicable Law in such Eligible Country, from de-registering the Aircraft under the laws of such Eligible Country, and exporting the Aircraft from such Eligible Country, without reference to any particular time period, (I) upon such change in registration, the resulting jurisdiction of one or more Governmental Entities of such Eligible Country over Lessee, Owner Trustee, Indenture Trustee, the Permitted Sublessee, the Aircraft or the operation or operator of the Aircraft (or over any interest in any thereof), as the case may be, and the consummation of the transactions contemplated by the Operative Documents after giving effect to the proposed re-registration of the Aircraft, do not violate any provision of the Trading with the Enemy Act of 1917, as amended, or any Executive Orders - 48 - 52 of the President of the United States of America or any regulations of the United States Treasury Department (including, without limitation, the Foreign Assets Control Regulations and the Transaction Control Regulations issued thereunder) or of any other Governmental Entity of the United States of America issued thereunder or otherwise violate any other like law or regulation of the United States of America, after giving effect to any licenses, permits or approvals thereunder obtained by, or on behalf of, Lessee, the Permitted Sublessee, Owner Trustee or Indenture Trustee, all of which are in full force and effect as of the date of such change in registration. Owner Trustee, Owner Participant and Indenture Trustee shall cooperate, at Lessee's expense and as it may reasonably request, in obtaining any such licenses, permits or approvals, (J) to such further effect with respect to such other matters relating to the recognition of Owner Trustee's interest in the Aircraft and perfection of the Lien of the Indenture if it has not been discharged pursuant to the terms thereof, as Owner Trustee, Owner Participant or Indenture Trustee may reasonably request, and (K) the aircraft maintenance standards of the new country of registry shall not be materially less stringent than those of the FAA or not materially less stringent than those of the United Kingdom Civil Aviation Authority. The following statements shall be true and correct at the time of the re-registration of the Aircraft: (a) no unindemnified tax risks or Taxes affecting Owner Participant or Owner Trustee will result from such re-registration; and (b) such re-registration shall not be in conflict with, and all action shall have been taken as may be required by, the terms of the Japanese Financing Documents in connection with such change in registration. Prior to the re-registration of the Aircraft as contemplated by this Section 11, Lessee shall furnish to Owner Participant and Indenture Trustee (1) an Officer's Certificate (as defined in the Indenture) stating that (i) all conditions precedent provided for in this Agreement and the Lease relating to the proposed re-registration of the Aircraft have been complied with, (ii) that the re-registration is in conformity with the requirements of this Agreement and the Lease, (iii) after giving effect to such re-registration, no Event of Default shall have occurred and be continuing, and (iv) the insurance required by Section 12 of the Lease is in full force and effect - 49 - 53 at the time of such change in registration after giving effect to such change in registration and (2) an opinion of counsel (which shall be by counsel other than an employee of Lessee) addressed to Owner Trustee, Owner Participant and Indenture Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. At any time during the Term of the Lease, the Owner Trustee, Indenture Trustee and Owner Participant shall, subject to the terms and conditions hereof, at the request and sole expense of Lessee cooperate with Lessee to comply with all terms of Section 7(a) of the Japanese Lease. Except as provided in this Section 11, Owner Trustee shall not cause any change in the registration of the Aircraft pursuant to Section 7(a) of the Japanese Lease during the Term of the Lease. Anything herein or in any other Operative Document to the contrary notwithstanding, at no time during the term of the Japanese Lease shall Lessee permit the Aircraft to be registered in Japan. The Operative Documents shall be amended in a manner reasonably satisfactory to Lessee, Owner Trustee and Indenture Trustee so as to include such covenants as may be appropriate to establish, protect and preserve the validity, priority and perfection of Owner Trustee's interest in the Aircraft, Lessee's interest under the Lease and the Lien of the Indenture in favor of Indenture Trustee. Lessee shall pay all costs, expenses, fees and recording, registration or any other Taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person claiming by, through or on behalf of them. - 50 - 54 SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against - 51 - 55 such Person not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of the Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor, or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor, or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien (including, without limitation, Claims against Lessor and Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien - 52 - 56 or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement and (iii) not to terminate or revoke the Trust Agreement. (b) Notwithstanding anything to the contrary in the Trust Agreement, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 45 days' prior notice thereof and (B) if, within 45 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Second Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Second Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Second Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such - 53 - 57 proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made, and (D) such change does not affect the registration of the Aircraft. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or the Indenture Trustee may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or - 54 - 58 Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis from and against any increase in Taxes borne by such Person that results from such change in situs. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay expenses relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was at the request of the Owner Participant. (e) The Trust Company agrees that if at any time it shall obtain actual knowledge that it has ceased to be or will likely cease to be a Citizen of the United States, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under such Federal Aviation Act or any other law to permit the continued registration of the Aircraft in the name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship would have any material adverse effect on any holder of Equipment Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of the successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement. - 55 - 59 SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Second Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all obligations and liabilities under the Sublease Guaranty, other than in respect of the obligations and liabilities of the Original Head Lessee in respect of Sublessor's Liens as provided above. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: (i) Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor and (ii) the Lessee shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) - 56 - 60 the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding) the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and - 57 - 61 Obligations and except in respect of the Second Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. (e) The Owner Participant hereby directs the Owner Trustee, and the Owner Trustee hereby agrees for the benefit of the Owner Participant, the Indenture Trustee, the Original Head Lessee, the Parent Guarantor, GPA Offshore and, to the extent provided in paragraph (ii) below, Lessee, that it shall, provided no Event of Default under the Lease shall have occurred and be continuing and the Lease shall not have been declared or deemed in default: (i)(A) with respect to the Japanese Financing Documents (as defined in the Indenture) to which it is or is made a party (or under which it has rights or obligations), and subject to the terms and conditions thereof, comply with all of the provisions with which it has undertaken to comply pursuant to the Japanese Lease Assignment that impose on Owner Trustee a duty or obligation, if and to the extent not performed or complied with, or required to be performed or complied with, by the Original Head Lessee or an Affiliate thereof, and not take any affirmative action that is in violation of any provisions (whether or not the Owner Trustee is bound by such provisions) of such Japanese Financing Documents or this Section 15, (B) observe and fulfill all conditions to be fulfilled by it pursuant to any of the Japanese Financing Documents in order to exercise rights under such documents which are vested in it, and (C) except as provided in paragraphs (iv), (v), (vi) and (vii) below and in Section 15(f) and (h), not exercise any discretionary actions under or with respect to the Japanese Financing Documents except solely at the written direction or with written consent of the Original Head Lessee or the Parent Guarantor or, if an Event of Default under the Lease shall have occurred and be continuing and the Lease shall have been declared or deemed to be in default, of the Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged) or the Owner Participant (thereafter) and the Trust Company shall comply with any such directions given in accordance with the provisions of this Section 15; (ii) not amend, supplement or otherwise modify or waive any provision of the Japanese Financing Documents or consent to any such amendment, supplement, modification or waiver, or grant any consent requested under any provision thereof, in any such case without the - 58 - 62 prior written consent of the Original Head Lessee, the Parent Guarantor, the Owner Participant, and (so long as the Lien of the Indenture shall not have been discharged) the Indenture Trustee and, if any obligation of the Lessee hereunder or under the Lease would be increased thereby, the Lessee; (iii) deliver promptly to the Original Head Lessee, the Lessee and (so long as the Lien of the Indenture shall not have been discharged) the Indenture Trustee, copies of all notices and other documents given by the Owner Trustee or received by it under any of the Japanese Financing Documents and copies of all amendments, supplements and modifications entered into from time to time to any Japanese Financing Documents to which it is or is made a party (or under which it possesses rights); (iv) exercise the purchase option provided for in Section 19 of the Japanese Lease effective (unless the Japanese Lease has previously been terminated in accordance with its terms) at the end of the scheduled Japanese Lease term by giving, no later than 120 days prior to the end of such scheduled Term, a written notice to the Japanese Lessor of the Owner Trustee's election to exercise such purchase option; provided that if the Owner Trustee shall fail to give such notice to the Japanese Lessor on or prior to such 120th day, each of the Owner Participant, the Original Head Lessee and the Indenture Trustee may at any time thereafter cause such purchase option to be exercised directly in the name of and on behalf of the Owner Trustee; (v) exercise the rights of termination provided for in Sections 9(a), 9(b) and 9(c) and the related purchase option provided for in Section 9(e) of the Japanese Lease, effective as of any time when such rights of termination and related purchase option are exercisable under said Sections 9(a), 9(b), 9(c) and 9(e), at the direction of the Original Head Lessee (other than the end of the scheduled Japanese Lease Term and other than as otherwise provided in this Section 15); provided that, with respect to any right of termination effected pursuant to Section 9(b)(ii), 9(b)(iii), 9(b)(iv) and 9(d)(i) (for an acceleration of the loan pursuant to subparagraphs (b), (c), (d), (e), (f) or (k) of Section 5.1 of the Japanese Loan Agreement) of the Japanese Lease, such right of termination and related purchase option shall be exercisable at the direction of the Original Head Lessee, the Parent Guarantor, the Owner Trustee or the - 59 - 63 Owner Participant or (so long as the Lien of the Indenture shall not have been discharged) the Indenture Trustee; (vi) exercise the purchase options referred to in Section 9 (upon the occurrence of a termination) and 10(a)(ii) of the Japanese Lease (upon the occurrence of an Event of Loss thereunder without replacement of the Airframe, under the Lease), at the direction of the Original Head Lessee, the Parent Guarantor, the Owner Trustee or (so long as the Lien of the Indenture has not been discharged) the Indenture Trustee; (vii) anything contained in this Section 15 to the contrary notwithstanding, exercise the purchase option referred to in Section 15(a) of the Japanese Lease, at the direction of the Indenture Trustee (so long as the Lien of the Indenture has not been discharged) and, if the Lien of the Indenture shall have been discharged, the Owner Participant or the Original Head Lessee; and (viii) not exercise any right to terminate or revoke any Japanese Financing Document, except as provided in this Section 15. (f) (i) Provided that no Event of Default under the Lease shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, any rights or claims that the Owner Trustee or the Indenture Trustee may have against the Japanese Lessor with respect to any of its representations, warranties and covenants under the Japanese Lease or any of the other Japanese Financing Documents may be enforced by the Original Head Lessee or the Parent Guarantor on behalf of the Owner Trustee or the Indenture Trustee, directly by the Original Head Lessee in its own name or in the name of or by the Owner Trustee or the Indenture Trustee; provided that if such rights or claims are exercised by the Owner Trustee or the Indenture Trustee (A) the Original Head Lessee and the Parent Guarantor shall be subrogated to any such rights of the Owner Trustee or the Indenture Trustee to the extent of any recovery by the Owner Trustee in respect thereof and (B) no such right or claim shall be enforced in a manner inconsistent with the provisions of this Section 15 specifying the party or parties entitled to take particular actions. (ii) Notwithstanding any other provision of this Section 15, should any provision of the Lease (including, without limitation, Sections 6, 9 and 11 thereof) require transfer of title to, or a release of the Lien of the Indenture on, the Aircraft, the Airframe or an Engine at a time when the Japanese Lease is in effect, after written notice thereof to and at the - 60 - 64 request and sole expense of the Original Head Lessee, the Owner Participant shall direct the Owner Trustee to use its reasonable best efforts to cause the Japanese Lessor to transfer such title pursuant to the terms of the Japanese Lease to the Owner Trustee free and clear of all Japanese Lessor Liens. (g) The Indenture Trustee shall not exercise any of the Owner Trustee's rights under the Japanese Financing Documents that have been assigned to the Indenture Trustee pursuant to the Indenture except as provided therein and in this Section 15. The Indenture Trustee consents to the performance by the Owner Trustee of the Owner Trustee's obligations under Sections 15(e) and 15(f) hereof and to the Original Head Lessee's and the Parent Guarantor's rights set forth therein. (h) Without limiting the foregoing, the Original Head Lessee and the Parent Guarantor hereby jointly and severally agree to procure the performance by the Japanese Lessee of its obligation to pay to the Japanese Lessor the Special Termination Payment (as defined in the Japanese Lease) in full when due upon any termination of the Japanese Lease pursuant to the provisions thereof. In furtherance thereof the Parent Guarantor has charged in favor of the Indenture Trustee an amount equal to the amount needed to fully satisfy the Japanese Lessee's obligation to make such Special Termination Payment to the Japanese Lessor, and authorizes and instructs the Indenture Trustee to exercise the rights of the Chargee under and as defined in the Yen Deposit Charge Agreement upon any termination of the Japanese Lease and the Special Termination Payment becoming due. The Original Head Lessee and the Parent Guarantor do hereby confirm to and agree with the Owner Trustee and the Indenture Trustee that (i) the Lease is and shall be deemed to be an Affiliated Sublease as defined in the Japanese Financing Documents and for the purpose of Section 14(j) of the Japanese Lease and (ii) upon the occurrence of an Event of Default under the Lease and the Lease having been declared or deemed in default and the exercise of one or more remedies under the Lease, the Indenture Trustee (so long as the Lien of the Indenture has not been discharged) and, if the Lien of the Indenture shall have been discharged, the Owner Trustee is hereby authorized, in their sole and absolute discretion, to deliver the certificate referred to in such Section 14(j) of the Japanese Lease and/or effect a voluntary termination of the Japanese Lease pursuant to the provisions thereof and in connection therewith to cause the Cash Deposit to be applied to the payment due to the Japanese Lessor thereunder. The Indenture Trustee agrees that upon the discharge of the Lien of the Indenture it shall, if the Yen Deposit Agreement and the Yen Deposit Charge Agreement are still in effect, assign to the Owner Trustee its rights as Chargee under the Yen Deposit Charge Agreement. The Owner Trustee and Indenture Trustee hereby agree to release or cause the release to the Parent Guarantor of any amounts consisting of the Cash Deposit or otherwise covered by - 61 - 65 the Yen Deposit Agreement or Yen Deposit Charge Agreement in excess of the Special Termination Payment amount from time to time and acknowledge and agree that such charges and agreements will be deemed released upon the expiration of the Japanese Lease, or the termination thereof and payment of the Special Termination Payment. (i) The Lessee agrees with the Original Head Lessee, the Owner Trustee, the Indenture Trustee, GPA Offshore and the Parent Guarantor that the Lessee will perform all of its covenants and obligations under the Lease, including Section 12(a) thereof, for the purposes of ensuring compliance with corresponding obligations under the Japanese Lease. (j) The Owner Participant hereby directs the Owner Trustee, and the Owner Trustee hereby agrees to pay to the Parent Guarantor, after payment to the Owner Participant of the OP SLV Amount set forth in Schedule IV hereto, the GPA SLV Amount set forth on Schedule V hereto from all and any amounts paid payable to the Owner Trustee or the Owner Participant upon the occurrence of an Event of Loss. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions - 62 - 66 contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, addressed to it at _______________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 450 West 33rd Street, New York, New York 10001 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner - 63 - 67 Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee and the Subordination Agent, (B) Kelley Drye & Warren LLP, special counsel for the Indenture Trustee, (C) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (D) Daugherty, Fowler & Peregrin, special counsel in - 64 - 68 Oklahoma City, Oklahoma and (E) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Morgan, Lewis & Bockius LLP, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this - 65 - 69 Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Aircraft from the lien of the Indenture and the termination of the Indenture pursuant to and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put - 66 - 70 Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 67 - 71 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:______________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA I, INC. By:______________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:______________________________ Name: Title: Address: GPA House Shannon, County Clare Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 68 - 72 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:______________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [_______________________] By:______________________________ Name: Title: Address: Telephone: Telecopier: Attention: - 69 - 73 THE CHASE MANHATTAN BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________ Name: Title: Address: 450 West 33rd Street New York, New York 10001 Telephone: (212) 946-3348 Telecopier: (212) 946-8160 Attention: Corporate Trust Department FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:______________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 70 - 74 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 71 - 75 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 76 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price Class A $ 11,936,661 02-Jul-2005 6.85% $ 11,936,661 Class B $ 4,476,247 02-Jan-2002 6.93% $ 4,476,247 Class C $ 4,476,247 02-Jan-2002 6.86% $ 4,476,247 Class D $ 2,288,832 02-Jan-98 8.16% $ 2,288,832
77 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 78 SCHEDULE IV to Refunding Agreement OP SLV AMOUNT [to come] 79 SCHEDULE V to Refunding Agreement GPA SLV AMOUNT [to come] 80 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-5] TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-5], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, [_____________________], a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1989 BN-5], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Second Amended and Restated 81 Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. - 2 - 82 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or - 3 - 83 accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand - 4 - 84 therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding except as required by law or regulation. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required (provided that the recipients of any payments hereunder shall not be entitled to receive any greater amount than if Transferee had made such payment). 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any - 5 - 85 lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; (g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and (h) the Guarantor is [type of legal personality] with a net worth of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of - 6 - 86 any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 7 - 87 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: _______________________________ Title: - 8 - 88 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-5] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-5] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, [_______________________], Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Second Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Second Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Second Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust 89 Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. - 2 - 90 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) on the date hereof it is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a net worth of not less than $60,000,000. 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. - 3 - 91 IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:_______________________________ Title: [ASSIGNEE] By:_______________________________ Title: - 4 - 92 EXHIBIT C to REFUNDING AGREEMENT LIST OF COUNTRIES Australia Canada Denmark Finland France Germany Iceland Ireland Luxembourg Netherlands New Zealand Norway Singapore South Korea Sweden Switzerland United Kingdom 93 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 94 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) Trust Agreement Supplement [GPA 1989 BN-5] No. 3 dated November 26, 1996 (the "Trust Agreement Supplement") between the Owner Trustee and the Owner Participant, amending the Trust Agreement, which Trust Agreement Supplement was filed with the FAA at 12:20 p.m., C.S.T. on November 26, 1996; (b) Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 3 [GPA 1989 BN-5] dated November 26, 1996 (the "Indenture Supplement"), with respect to the Aircraft, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (c) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as assignee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (d) Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5] dated as of September 22, 1989, amended and restated as of October 1, 1991 and amended and EX-4.12 13 FORM OF REFUNDING AGREEMENT [GPA 1989 BN-6] 1 Exhibit 4.12 - -------------------------------------------------------------------------------- REFUNDING AGREEMENT [GPA 1989 BN-6] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA SUB I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements [--------------------------], as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and THE CHASE MANHATTAN BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 65 Registration No. N626AW Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
Page ---- SECTION 1. Purchase of Equipment Notes; Refunding.................................................... 8 SECTION 2. Equipment Notes........................................................................... 10 SECTION 3. Conditions Precedent...................................................................... 10 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee............................................ 18 SECTION 5. Amendment and Restatement of the First Amended and Restated Indenture.............................................................. 22 SECTION 6. Amendment and Restatement of the First Amended and Restated Lease.................................................................. 22 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc........................................................ 22 SECTION 8. Representations and Warranties of the Lessee............................................. 23 SECTION 9. Representations and Warranties........................................................... 27 SECTION 10. Transfer of Owner Participant's Interest................................................. 42 SECTION 11. Re-Registration of the Aircraft.......................................................... 46 SECTION 12. Quiet Enjoyment.......................................................................... 49 SECTION 13. Liens.................................................................................... 50 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant........................................ 52 SECTION 15. Certain Retained Rights and Releases..................................................... 55 SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee............................................................... 61 SECTION 17. Lessee Protection of Title............................................................... 61 SECTION 18. Jurisdictional and Related Matters....................................................... 61 SECTION 19. Limitation on Recourse................................................................... 63
- i - 3 SECTION 20. Notices................................................................................... 63 SECTION 21. Expenses.................................................................................. 63 SECTION 22. Reliance of Liquidity Provider............................................................ 64 SECTION 23. Miscellaneous............................................................................. 64 SECTION 24. Governing Law............................................................................. 66 SECTION 25. Effectiveness............................................................................. 59
Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Schedule IV OP SLV Amount Schedule V GPA SLV Amount Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1989 BN-6] REFUNDING AGREEMENT [GPA 1989 BN-6] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) [_______________________], a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the four separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, FG Vision Leasing Co., Ltd., a Japanese limited purpose corporation (the "Japanese Lessor") and Air Tara Caymans II, Limited, a Cayman Islands corporation wholly-owned by the Parent Guarantor ("GPA Offshore"), entered into the Agreement to Purchase and Lease [GPA 1989 BN-6], dated as of September 28, 1989 among GPA Offshore, the Parent Guarantor, Barclays Bank plc, a public limited company organized under the laws of England and acting through its Tokyo branch (the "Japanese Lender") and the Japanese Lessor (the "Agreement to Purchase and Lease"), pursuant to which, among other things, GPA Offshore agreed to sell to Japanese Lessor, and Japanese Lessor agreed to purchase from GPA Offshore, the Aircraft (as defined below) on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Agreement to Purchase and Lease, the Japanese Lessor and 5 GPA Offshore entered into the Japanese Lease Agreement [GPA 1989 BN-6] dated as of September 28, 1989, as supplemented by Lease Supplement No. 1, dated September 29, 1989 (the "Japanese Lease Supplement") (as so supplemented, the "Japanese Lease") pursuant to which the Japanese Lessor agreed to lease to GPA Offshore (in its capacity as lessee thereunder, together with its successors and assigns, the "Japanese Lessee"), and GPA Offshore agreed to lease from the Japanese Lessor, the Aircraft; WHEREAS, on September 29, 1989 GPA Offshore and the Grand Cayman branch of the Japanese Lender (the "Defeasance Bank") entered into two Assumption Agreements, dated as of September 28, 1989, for Yen payments and Pounds Sterling payments, respectively (as amended, modified or supplemented from time to time in accordance with the terms thereof and of the Operative Documents, collectively, the "Assumption Agreements"), pursuant to which the Defeasance Bank assumed certain of the obligations of GPA Offshore under the Japanese Lease for certain rent, termination and deficiency payments to be made thereunder (the portion thereof so assumed being herein called the "Defeased Payments" and the Yen portion thereof not so assumed being herein called the "Undefeased Yen Amount") in consideration of the unconditional and irrevocable payment to it by GPA Offshore of the agreed amounts set forth therein; WHEREAS, on September 29, 1989, the Parent Guarantor delivered to the Japanese Lessor the Japanese Lease Guaranty dated as of September 28, 1989 (the "Japanese Lease Guaranty"); WHEREAS, on September 29, 1989, the Defeasance Bank and the Japanese Lessor entered into two Confirmations and Agreements, dated as of September 28, 1989 for Yen payments and Pounds Sterling payments, respectively, (as amended, modified, or supplemented from time to time in accordance with the terms thereof and of the Operative Documents, collectively, the "Confirmation and Agreement"), pursuant to which the Defeasance Bank agreed to undertake directly with the Japanese Lessor to make the Defeased Payments under the Japanese Lease; WHEREAS, concurrently with the execution and delivery of the Agreement to Purchase and Lease, the Japanese Lessor and GPA Offshore entered into the Supplemental Agreement dated as of September 28, 1989 (the "Supplemental Agreement") pursuant to which the Japanese Lessor agreed with GPA Offshore that the Japanese Lessor's interest in the Aircraft shall be subject and subordinate to the security interest of the Indenture Trustee, and that the Japanese Lessor shall relinquish to the Indenture Trustee any proceeds of a disposition of the Aircraft in the case of a foreclosure proceeding; WHEREAS, concurrently with the execution and delivery of the Agreement to Purchase and Lease, GPA Offshore and the - 2 - 6 Original Head Lessee entered into a Lease Assignment, dated as of September 28, 1989 ("First Japanese Lease Assignment") pursuant to which GPA Offshore assigned to the Original Head Lessee all of its right, title and interest (but not any of its obligations) in the Aircraft under the Japanese Lease, the Japanese Lease Supplement, the Assumption Agreement, the Confirmation and Agreement, the Supplemental Agreement, the Japanese Security Agreement (as defined below), the Omnibus Agreement, the FUYO Guaranty and the other Japanese Financing Documents, and GPA Offshore remained solely liable for its obligations under the Japanese Lease and such other agreements; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement (as defined below), the Original Head Lessee and the Owner Trustee entered into the Lease Assignment dated as of December 15, 1989 (as amended, modified or supplemented from time to time in accordance with the terms thereof and of the Operative Documents, the "Second Japanese Lease Assignment"), pursuant to which the Original Head Lessee agreed to assign to the Owner Trustee all of its right, title and interest (but not any of its obligations) in the Aircraft under the Japanese Lease, the Japanese Lease Supplement, the First Japanese Lease Assignment, the Japanese Security Agreement, the Assumption Agreement, the Confirmation and Agreement, the Supplemental Agreement, the Omnibus Agreement, the FUYO Guaranty and the other Japanese Financing Documents in which it has an interest. WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Manufacturers Hanover Trust Company and The Mitsubishi Trust and Banking Corporation, as Lenders (the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1989 BN-6], dated as of December 15, 1989 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one Airbus A320-231 aircraft (the "Aircraft"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1989 BN-6], dated as of December 15, 1989, as supplemented by Trust Indenture Supplement No. 1 [GPA 1989 BN-6], dated December 22, 1989 (as so supplemented, the "Original Indenture"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-6], dated as of December 15, 1989, as supplemented by Lease Supplement [GPA 1989 BN-6] No. 1 dated December 22, 1989 (as so supplemented, the "Original Lease"), whereby, subject to - 3 - 7 the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1989 BN-6] dated as of December 15, 1989 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1989 BN-6], dated as of December 15, 1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-6] No. 1 dated December 22, 1989, and as further supplemented by Trust Agreement Supplement [GPA 1989 BN-6] No. 2 dated October 24, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1989 BN-6], dated as of December 15, 1989 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); WHEREAS, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1989 BN-6] dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1989 BN-6] dated September 28, 1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-6] dated as of June 25, 1991 and Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989 BN-6] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1989 BN-6] dated as of September 21, 1990 - 4 - 8 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of the Original Head Lessee under Section 21(f) of the Sublease; WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1989 BN-6], dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease and Sublessee Consent and Agreement [GPA 1989 BN-6] dated as of September 21, 1990, as amended by Amendment No. 1 to Assignment of Sublease and Sublessee Consent and Agreement [GPA 1989 BN-6] dated as of October 1, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, in connection with the Term Refunding (as defined in the Participation Agreement), the Original Head Lessee, the Parent Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee entered into Amendment No. 1 to Participation Agreement [GPA 1989 BN-6], dated as of October 1, 1991 ("PA Amendment No. 1"); WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Trustee and the Indenture Trustee entered into the Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6], dated as of October 1, 1991, as supplemented by Trust Indenture Supplement No. 2 [GPA 1989 BN-6], dated October 24, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Indenture"); WHEREAS, pursuant to the First Amended and Restated Indenture, the Owner Trustee issued equipment trust certificates substantially in the form set forth in Exhibit C thereof (the "Original Certificates") to the holders thereof (the "Original Certificate Holders") as evidence of the indebtedness then being made by the Owner Trustee to refinance a portion of the purchase price of the Aircraft; WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Trustee and the Original Head Lessee entered into the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6], dated as of October 1, 1991, as supplemented by Lease Supplement [GPA 1989 BN-6] No. 2, dated October 24, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Lease"); - 5 - 9 WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Participant and the Original Head Lessee entered into the Amended and Restated Head Lease Tax Indemnification Agreement [GPA 1989 BN-6], dated as of October 1, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Head Lease TIA"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will further amend and restate the First Amended and Restated Indenture as the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 3 dated the Restatement Date (the "Second Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in four series, the proceeds from the issuance and sale of which will be applied in part to the redemption in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the First Amended and Restated Lease as the Second Amended and Restated Lease (as so amended and restated, the "Lease"); WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-6] No. 3 ("Trust Supplement No. 3"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Second Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the First Amended and Restated Head Lease TIA (as so amended and restated, the "Second Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); - 6 - 10 WHEREAS, at the Closing, the Parent Guarantor and The Chase Manhattan Bank (the "Deposit Bank") will enter into the Yen Deposit Agreement ("Yen Deposit Agreement"), providing for the Parent Guarantor to place on deposit the Undefeased Yen Amount (as defined in the Yen Deposit Agreement) (the "Cash Deposit") with the Deposit Bank; WHEREAS, at the Closing, the Parent Guarantor and the Indenture Trustee will enter into the Yen Deposit Charge Agreement (the "Yen Deposit Charge Agreement") under which the Parent Guarantor shall charge and assign to the Indenture Trustee all of its right, title and interest in and to the Yen Deposit Agreement and the Cash Deposit to secure the Parent Guarantor's obligations under Section 15(h) of this Agreement; WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, four separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of - 7 - 11 which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates to but not including the Restatement Date plus an amount equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.16(b)(ii) of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xiii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to (A) the unpaid principal amount of the Original Certificates and (B) the amounts specified in clause (i)(B) of this Section 1 (collectively, the "Aggregate Redemption Amount"); (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the Aggregate Redemption Amount owing to them on the Restatement Date with respect to the Original Certificates as a redemption of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; (vi) the Parent Guarantor and the Deposit Bank shall enter into the Yen Deposit Agreement and the Parent Guarantor shall place the Cash Deposit with the Deposit Bank, and the Parent Guarantor and the - 8 - 12 Indenture Trustee shall enter into the Yen Deposit Charge Agreement securing the Parent Guarantor's obligations under Section 15(h) of this Agreement; (vii) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 3); (viii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (ix) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 3; (x) the Original Head Lessee and the Owner Participant shall enter into the Second Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (xi) the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" aircraft to the Lessee and the obligation of the Lessee to accept and lease such aircraft (the "Put Termination Agreement"); (xii) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xiii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to - 9 - 13 execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except - 10 - 14 that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (8): (1) this Agreement; (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; (3) Trust Supplement No. 3; (4) the Second Amended and Restated Indenture and Trust Indenture Supplement No. 3; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement); and (8) the Yen Deposit Agreement and the Yen Deposit Charge Agreement. (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person - 11 - 15 in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (1), (5) and (6) below, a certificate signed by an authorized officer of the Lessee and, in the case of (2), (3) and (4) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness and has a current, valid certificate of airworthiness; (2) the Second Aircraft FAA Bill of Sale (as defined in the Participation Agreement), the Original Lease, the First Amended and Restated Lease, the Original Indenture and the First Amended and Restated Indenture have each been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49 of the United - 12 - 16 States Code relating to aviation (the "Federal Aviation Act"); (3) Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, the Second Amended and Restated Indenture, Trust Indenture Supplement No. 3 and Trust Supplement No. 3 covering the Aircraft shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; (4) the Aircraft has been registered with the FAA in the name of the Owner Trustee; (5) the Lessee has authority to operate the Aircraft; and (6) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, - 13 - 17 certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions - 14 - 18 contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized officer of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice PresidentLegal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special - 15 - 19 counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Kelley Drye & Warren LLP, special counsel for the Indenture Trustee, and (ii) Shipman & Goodwin LLP, special counsel for the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Morgan, Lewis & Bockius LLP, special counsel for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Pass Through Trustee, the Owner Trustee and the Indenture Trustee each shall have received an opinion addressed to it from Freshfields, special English counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (r) The Original Head Lessee, the Lessee, GPA Leasing USA I, Inc. and the Parent Guarantor shall have entered into the - 16 - 20 Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (s) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Second Amended and Restated Head Lease TIA. (t) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. (u) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (v) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (w) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. - 17 - 21 (x) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (y) The Owner Trustee shall have received a letter of credit in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the Lease. (z) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Second Amended and Restated Lease (including Lease Supplement No. 3) and the Second Amended and Restated Indenture (including Trust Indenture Supplement No. 3) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, the Second Amended and Restated Indenture, Trust Indenture Supplement No. 3 and Trust Supplement No. 3. Promptly following the execution and delivery of the Yen Deposit Charge Agreement (and in no event later than the deadline prescribed by law), the Parent Guarantor shall cause the prescribed particulars in respect of the Yen Deposit Charge Agreement and the Yen Deposit Charge Agreement itself to be delivered to the registrar of companies in the United Kingdom and Ireland for filing. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; - 18 - 22 (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; (3) the Second Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases and terminations as it may reasonably request; (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"); and (10) the Yen Deposit Agreement and the Yen Deposit Charge Agreement. (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters - 19 - 23 relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. - 20 - 24 (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of - 21 - 25 them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the First Amended and Restated Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Second Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Second Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the Second Amended and Restated Indenture. The Second Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the First Amended and Restated Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the First Amended and Restated Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Second Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect on and after the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. - 22 - 26 SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee - 23 - 27 Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect, (B) the registration of the Aircraft pursuant to the Federal Aviation Act and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; - 24 - 28 (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 3, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; - 25 - 29 (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings do not involve any material danger to the sale, forfeiture or loss of the Aircraft; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control - 26 - 30 Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Aircraft under the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Aircraft. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a corporation duly incorporated, validly existing and in good standing under the laws of the State of New York, is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (as so defined, a "Citizen of the United States") (without making use of a voting trust, voting powers agreement or similar arrangement), will notify promptly all parties to this - 27 - 31 Agreement if in its reasonable opinion its status as a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement) is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Indenture promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement), and has the full corporate power, authority and legal right under the laws of the State of New York and the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture, the Yen Deposit Charge Agreement and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1, the Yen Deposit Charge Agreement and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party have been duly authorized by the Indenture Trustee and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; (3) this Agreement constitutes, and the Indenture and the Yen Deposit Charge Agreement, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its - 28 - 32 obligations under the Yen Deposit Charge Agreement and the Operative Documents to which it is a party; (5) there are no Lenders' Liens (as defined in the Lease) on the Aircraft or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (6) it has possession of the chattel paper original counterpart of the Original Lease, the First Amended and Restated Lease, Lease Amendment No. 1 and the Second Amended and Restated Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 3, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, - 29 - 33 executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 3, the Original Indenture, the First Amended and Restated Indenture, the Indenture, the Original Lease, the First Amended and Restated Lease, Lease Amendment No. 1, the Lease, the Equipment Notes or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to - 30 - 34 which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States of America governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes, or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of Delaware or any political subdivision thereof in connection with the redemption of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions - 31 - 35 contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; (10) both its chief executive office, and the place where its records concerning the Aircraft and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto; and (11) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Second Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust Supplement No. 3 have been duly authorized, executed and delivered by it; and this Agreement, the Trust Agreement, the SLV Letter Agreement and the Second Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or - 32 - 36 other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Second Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Second Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than the laws, rules or regulations relating to aircraft lease transactions generally or to the citizenship requirements of the Owner Participant under the Federal Aviation Act); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Second Amended and Restated Head Lease TIA; - 33 - 37 (5) neither the Owner Participant nor anyone authorized by it to act on its behalf (it being understood that in proposing, facilitating and otherwise taking any action in connection with the refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Equipment Notes or Certificates or any interest in and to the Trust Estate, the Trust Agreement or any similar interest for sale to, or solicited any offer to acquire any of the same from, more than ten Persons; the Owner Participant's interest in the Trust Estate and the Trust Agreement was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens); and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). If at any time Owner Participant has ceased to be, or shall have actual knowledge that it is likely to cease to be, such a citizen, and (i) the Aircraft shall be or would thereupon become ineligible for registration in the name of Owner Trustee under the Federal Aviation Act as in effect at such time (without regard to the "based and primarily used" provisions thereof) and the regulations then applicable thereunder, or (ii) the Aircraft is registered in a jurisdiction other than the United States of America, in circumstances in which the preceding clause (i) does not apply and the Lessee or any Permitted Sublessee at any time proposes to register the Aircraft in the United States of America, then Owner Participant shall (at its own expense and without any reimbursement or indemnification from the Lessee or any Permitted Sublessee) (A) immediately either (1) transfer in accordance with Section 10 hereof all of its right, title and interest in and to the Trust Agreement, the Trust Estate, this Agreement and the Second Amended and Restated Head Lease TIA or (2) take such other action, including, without limitation, the establishment of a voting trust or voting powers agreement (in which case Owner Participant shall remain the beneficial owner of the Trust Estate), as may be necessary to prevent the deregistration of the - 34 - 38 Aircraft under the Federal Aviation Act or to maintain such registration of the Aircraft or to make possible such registration of the Aircraft in the United States of America and to prevent Indenture Trustee, the Holders of the Equipment Notes, the Lessee or any Permitted Sublessee from being adversely affected as a result thereof and (B) indemnify the Lessee, the Indenture Trustee, the Holders of the Equipment Notes and any Permitted Sublessee, from and against any and all Claims incurred or suffered as a result of Owner Participant's failure to be such a citizen or loss of such citizenship, including, without limitation, as a result of the Aircraft's becoming ineligible or ceasing to remain eligible for such registration. (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this - 35 - 39 Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the - 36 - 40 transactions contemplated by any of the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (e) The Subordination Agent represents and warrants that: - 37 - 41 (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, - 38 - 42 the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination - 39 - 43 Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Second Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; - 40 - 44 (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Aircraft free and clear of all Liens, except the rights of the parties to the Japanese Financing Documents, the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Aircraft, and Permitted Liens under the Original Lease; (7) title to the Buyer Furnished Equipment for the Aircraft has been transferred in accordance with Section 8(y) of the Participation Agreement. As of the Restatement Date, there are no existing Claims against Parent Guarantor or Original Head Lessee with respect to Buyer Furnished Equipment; and (8) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 3, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended - 41 - 45 financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement, the Yen Deposit Agreement and the Yen Deposit Charge Agreement (collectively, the "Parent Guarantor Transaction Documents"); each Parent Guarantor Transaction Document has been duly authorized, and upon the execution and delivery thereof, will constitute, the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors - 42 - 46 generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement and each of the other Parent Guarantor Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement and each of the other Parent Guarantor Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement or any other Parent Guarantor Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty in - 43 - 47 Section 9(f)(8) shall be only for the benefit of Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by consolidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom; provided that, subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank or other financial institution with a combined capital, surplus and undivided profits of at least $60,000,000, or a corporation whose consolidated tangible net worth is at least $60,000,000, exclusive of goodwill, all of the foregoing determined in accordance with U.S. generally accepted accounting principles, (B) any wholly-owned subsidiary of such bank, financial institution or corporation if such bank, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) an Affiliate or a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such Affiliate's or subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the - 44 - 48 facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and does not violate clause (viii) below; provided that if such Transferee is an Affiliate of Owner Participant, such notice may be given promptly following rather than prior to such transfer; (iii) upon giving effect to such transfer, such Transferee is a Citizen of the United States, and such Transferee shall deliver to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an affidavit to such effect; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not and will not involve, either directly or indirectly, the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA that would cause a violation of any provision of ERISA or the imposition of an excise tax under the Code; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, a freight transporter, any Person engaged in the business of parcel transport by air, or a subsidiary or an Affiliate thereof; (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in - 45 - 49 clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Second Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Aircraft previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Second Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Second Amended and Restated Head Lease TIA by or against Owner Participant which have been made prior to the date of such transfer. The transferor Owner Participant shall pay all expenses of each party hereto related to any such transfer. Owner Participant covenants and warrants that it shall not transfer all or any portion of its interest in the Trust Estate except in accordance with this Section 10 and that it shall not itself, or direct Owner Trustee to, take any action in contravention of the Lessee's rights under the Lease except in accordance with the provisions of the Lease. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (7) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. The Lessee shall have no obligation to prevent any such deregistration or - 46 - 50 assist in maintaining or otherwise enhancing the Aircraft's eligibility for registration by restricting the use of the Aircraft. SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee agrees, that if the Owner Participant consents thereto, which consent shall not be unreasonably withheld, at any time after the Restricted Use Period, Lessee may, in connection with effecting a Permitted Sublease elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit C hereto (or such other country as the Owner Participant approves) (each, an "Eligible Country") and (b) the following conditions are met: (i) unless the country of registry is Taiwan, the United States of America maintains normal diplomatic relations with the country of registry of the Aircraft, and if the country of registry is Taiwan, the United States of America maintains diplomatic relations at least as good as those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner Participant and the Indenture Trustee shall have received favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably acceptable to the Owner Participant to the effect of the following and as to such other matters as the Owner Participant may reasonably request: (A) the Owner Trustee's ownership interest in the Aircraft and interest in the Lease and any Permitted Sublease shall be recognized under the laws of such Eligible Country, (B) the obligations of Lessee, and the rights and remedies of the Owner Trustee, under the Lease shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such Eligible Country (or the laws of the jurisdiction to which the laws of such Eligible Country would refer as the applicable governing law), (C) after giving effect to such change in registration, the Lien of the Indenture on the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and any Permitted Sublease shall continue as a valid and duly perfected security interest and all filing, recording or other action necessary to protect the same shall have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording or other action is necessary and (2) the Owner Trustee and the Indenture - 47 - 51 Trustee shall have received a certificate from Lessee that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be delivered to the Owner Trustee and the Indenture Trustee on or prior to the effective date of such change in registration), (D) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Owner Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate thereof), as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such Eligible Country, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such Eligible Country (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), (F) (unless Lessee shall have agreed, or pursuant to the Lease shall have been required, to provide insurance covering the risk of requisition of use of such Aircraft by the government of such Eligible Country so long as such Aircraft is registered under the laws of such Eligible Country) the laws of such jurisdiction require fair compensation by the government of such Eligible Country payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use, (G) upon such change in registration, under the laws of such Eligible Country, any import or export permits necessary to take the Aircraft into or out of such Eligible Country and any foreign exchange or other like permits or approvals necessary to allow all "basic rent", "renewal rent" and casualty value payments provided for in such Permitted Sublease, which are obtainable at the commencement of such Permitted Sublease, will be in full force and effect, (H) under the Laws of such Eligible Country, the remedies set forth in such Permitted Sublease are effective to enable Lessee or its assignee as sublessor to repossess, subject to compliance with applicable Law in such Eligible Country in connection therewith, the Aircraft following a valid termination thereof, and there is no provision of such Laws which by its terms would prevent Lessee or its assignee - 48 - 52 as sublessor, upon compliance with the provisions of applicable Law in such Eligible Country, from de-registering the Aircraft under the laws of such Eligible Country, and exporting the Aircraft from such Eligible Country, without reference to any particular time period, (I) upon such change in registration, the resulting jurisdiction of one or more Governmental Entities of such Eligible Country over Lessee, Owner Trustee, Indenture Trustee, the Permitted Sublessee, the Aircraft or the operation or operator of the Aircraft (or over any interest in any thereof), as the case may be, and the consummation of the transactions contemplated by the Operative Documents after giving effect to the proposed re-registration of the Aircraft, do not violate any provision of the Trading with the Enemy Act of 1917, as amended, or any Executive Orders of the President of the United States of America or any regulations of the United States Treasury Department (including, without limitation, the Foreign Assets Control Regulations and the Transaction Control Regulations issued thereunder) or of any other Governmental Entity of the United States of America issued thereunder or otherwise violate any other like law or regulation of the United States of America, after giving effect to any licenses, permits or approvals thereunder obtained by, or on behalf of, Lessee, the Permitted Sublessee, Owner Trustee or Indenture Trustee, all of which are in full force and effect as of the date of such change in registration. Owner Trustee, Owner Participant and Indenture Trustee shall cooperate, at Lessee's expense and as it may reasonably request, in obtaining any such licenses, permits or approvals, (J) to such further effect with respect to such other matters relating to the recognition of Owner Trustee's interest in the Aircraft and perfection of the Lien of the Indenture if it has not been discharged pursuant to the terms thereof, as Owner Trustee, Owner Participant or Indenture Trustee may reasonably request, and (K) the aircraft maintenance standards of the new country of registry shall not be materially less stringent than those of the FAA or not materially less stringent than those of the United Kingdom Civil Aviation Authority. The following statements shall be true and correct at the time of the re-registration of the Aircraft: (a) no unindemnified tax risks or Taxes affecting Owner Participant or Owner Trustee will result from such reregistration; and - 49 - 53 (b) such re-registration shall not be in conflict with, and all action shall have been taken as may be required by, the terms of the Japanese Financing Documents in connection with such change in registration. Prior to the re-registration of the Aircraft as contemplated by this Section 11, Lessee shall furnish to Owner Participant and Indenture Trustee (1) an Officer's Certificate (as defined in the Indenture) stating that (i) all conditions precedent provided for in this Agreement and the Lease relating to the proposed re-registration of the Aircraft have been complied with, (ii) that the re-registration is in conformity with the requirements of this Agreement and the Lease, (iii) after giving effect to such re-registration, no Event of Default shall have occurred and be continuing, and (iv) the insurance required by Section 12 of the Lease is in full force and effect at the time of such change in registration after giving effect to such change in registration and (2) an opinion of counsel (which shall be by counsel other than an employee of Lessee) addressed to Owner Trustee, Owner Participant and Indenture Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. At any time during the Term of the Lease, the Owner Trustee, Indenture Trustee and Owner Participant shall, subject to the terms and conditions hereof, at the request and sole expense of Lessee cooperate with Lessee to comply with all terms of Section 7(a) of the Japanese Lease. Except as provided in this Section 11, Owner Trustee shall not cause any change in the registration of the Aircraft pursuant to Section 7(a) of the Japanese Lease during the Term of the Lease. Anything herein or in any other Operative Document to the contrary notwithstanding, at no time during the term of the Japanese Lease shall Lessee permit the Aircraft to be registered in Japan. The Operative Documents shall be amended in a manner reasonably satisfactory to Lessee, Owner Trustee and Indenture Trustee so as to include such covenants as may be appropriate to establish, protect and preserve the validity, priority and perfection of Owner Trustee's interest in the Aircraft, Lessee's interest under the Lease and the Lien of the Indenture in favor of Indenture Trustee. Lessee shall pay all costs, expenses, fees and recording, registration or any other Taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and - 50 - 54 as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of - 51 - 55 indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of the Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor, or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any - 52 - 56 diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor, or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien (including, without limitation, Claims against Lessor and Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement and (iii) not to terminate or revoke the Trust Agreement. (b) Notwithstanding anything to the contrary in the Trust Agreement, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 45 days' prior notice thereof and (B) if, within 45 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner - 53 - 57 Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Second Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Second Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Second Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made, and (D) such change does not affect the registration of the Aircraft. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or the Indenture Trustee may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established trust, (II) any amendments to the Trust Agreement or the - 54 - 58 Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis from and against any increase in Taxes borne by such Person that results from such change in situs. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay expenses relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was at the request of the Owner Participant. (e) The Trust Company agrees that if at any time it shall obtain actual knowledge that it has ceased to be or will likely cease to be a Citizen of the United States, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under such Federal Aviation Act or any other law to permit the continued registration of the Aircraft in the - 55 - 59 name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship would have any material adverse effect on any holder of Equipment Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of the successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement. SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Second Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all obligations and liabilities under the Sublease Guaranty, other than in respect of the obligations and liabilities of the Original Head Lessee in respect of Sublessor's Liens as provided above. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termina- - 56 - 60 tion of the Sublease: (i) Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor and (ii) the Lessee shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding) the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the - 57 - 61 foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Second Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. (e) The Owner Participant hereby directs the Owner Trustee, and the Owner Trustee hereby agrees for the benefit of the Owner Participant, the Indenture Trustee, the Original Head Lessee, the Parent Guarantor, GPA Offshore and, to the extent provided in paragraph (ii) below, Lessee, that it shall, provided no Event of Default under the Lease shall have occurred and be continuing and the Lease shall not have been declared or deemed in default: (i)(A) with respect to the Japanese Financing Documents (as defined in the Indenture) to which it is or is made a party (or under which it has rights or obligations), and subject to the terms and conditions thereof, comply with all of the provisions with which it has undertaken to comply pursuant to the Second Japanese Lease Assignment that impose on Owner Trustee a duty or obligation, if and to the extent not performed or complied with, or required to be performed or complied with, by the Original Head Lessee or an Affiliate thereof, and not take any affirmative action that is in violation of any provisions (whether or not the Owner Trustee is bound by such provisions) of such Japanese Financing Documents or this Section 15, (B) observe and fulfill all conditions to be fulfilled by it pursuant to any of the Japanese Financing Documents in order to exercise rights under such documents which are vested in it, and (C) except as provided in paragraphs (iv), (v), (vi) and (vii) below and in Section 15(f) and (h), not exercise any discretionary actions under or with respect to the Japanese Financing Documents except solely at the written direction or with written consent of the Original Head Lessee or the Parent Guarantor or, if an Event of Default under the Lease shall have occurred and be continuing and the Lease shall have been declared or deemed to be in default, of the Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged) or the Owner Participant (thereafter) and the Trust Company - 58 - 62 shall comply with any such directions given in accordance with the provisions of this Section 15; (ii) not amend, supplement or otherwise modify or waive any provision of the Japanese Financing Documents or consent to any such amendment, supplement, modification or waiver, or grant any consent requested under any provision thereof, in any such case without the prior written consent of the Original Head Lessee, the Parent Guarantor, the Owner Participant, and (so long as the Lien of the Indenture shall not have been discharged) the Indenture Trustee and, if any obligation of the Lessee hereunder or under the Lease would be increased thereby, the Lessee; (iii) deliver promptly to the Original Head Lessee, the Lessee and (so long as the Lien of the Indenture shall not have been discharged) the Indenture Trustee, copies of all notices and other documents given by the Owner Trustee or received by it under any of the Japanese Financing Documents and copies of all amendments, supplements and modifications entered into from time to time to any Japanese Financing Documents to which it is or is made a party (or under which it possesses rights); (iv) exercise the purchase option provided for in Section 19 of the Japanese Lease effective (unless the Japanese Lease has previously been terminated in accordance with its terms) at the end of the scheduled Japanese Lease term by giving, no later than 120 days prior to the end of such scheduled Term, a written notice to the Japanese Lessor of the Owner Trustee's election to exercise such purchase option; provided that if the Owner Trustee shall fail to give such notice to the Japanese Lessor on or prior to such 120th day, each of the Owner Participant, the Original Head Lessee and the Indenture Trustee may at any time thereafter cause such purchase option to be exercised directly in the name of and on behalf of the Owner Trustee; (v) exercise the rights of termination provided for in Sections 9(a), 9(b) and 9(c) and the related purchase option provided for in Section 9(e) of the Japanese Lease, effective as of any time when such rights of termination and related purchase option are exercisable under said Sections 9(a), 9(b), 9(c) and 9(e), at the direction of the Original Head Lessee (other than the end of the scheduled Japanese Lease Term and other than as otherwise provided in this Section 15); provided that, with respect to any right - 59 - 63 of termination effected pursuant to Section 9(b)(ii), 9(b)(iii), 9(b)(iv) and 9(d)(i) (for an acceleration of the loan pursuant to subparagraphs (b), (c), (d), (e), (f) or (k) of Section 5.1 of the Japanese Loan Agreement) of the Japanese Lease, such right of termination and related purchase option shall be exercisable at the direction of the Original Head Lessee, the Parent Guarantor, the Owner Trustee or the Owner Participant or (so long as the Lien of the Indenture shall not have been discharged) the Indenture Trustee; (vi) exercise the purchase options referred to in Section 9 (upon the occurrence of a termination) and 10(a)(ii) of the Japanese Lease (upon the occurrence of an Event of Loss thereunder without replacement of the Airframe, under the Lease), at the direction of the Original Head Lessee, the Parent Guarantor, the Owner Trustee or (so long as the Lien of the Indenture has not been discharged) the Indenture Trustee; (vii) anything contained in this Section 15 to the contrary notwithstanding, exercise the purchase option referred to in Section 15(a) of the Japanese Lease, at the direction of the Indenture Trustee (so long as the Lien of the Indenture has not been discharged) and, if the Lien of the Indenture shall have been discharged, the Owner Participant or the Original Head Lessee; and (viii) not exercise any right to terminate or revoke any Japanese Financing Document, except as provided in this Section 15. (f) (i) Provided that no Event of Default under the Lease shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, any rights or claims that the Owner Trustee or the Indenture Trustee may have against the Japanese Lessor with respect to any of its representations, warranties and covenants under the Japanese Lease or any of the other Japanese Financing Documents may be enforced by the Original Head Lessee or the Parent Guarantor on behalf of the Owner Trustee or the Indenture Trustee, directly by the Original Head Lessee in its own name or in the name of or by the Owner Trustee or the Indenture Trustee; provided that if such rights or claims are exercised by the Owner Trustee or the Indenture Trustee (A) the Original Head Lessee and the Parent Guarantor shall be subrogated to any such rights of the Owner Trustee or the Indenture Trustee to the extent of any recovery by the Owner Trustee in respect thereof and (B) no such right or claim shall be enforced in a manner inconsistent with the provisions of this - 60 - 64 Section 15 specifying the party or parties entitled to take particular actions. (ii) Notwithstanding any other provision of this Section 15, should any provision of the Lease (including, without limitation, Sections 6, 9 and 11 thereof) require transfer of title to, or a release of the Lien of the Indenture on, the Aircraft, the Airframe or an Engine at a time when the Japanese Lease is in effect, after written notice thereof to and at the request and sole expense of the Original Head Lessee, the Owner Participant shall direct the Owner Trustee to use its reasonable best efforts to cause the Japanese Lessor to transfer such title pursuant to the terms of the Japanese Lease to the Owner Trustee free and clear of all Japanese Lessor Liens. (g) The Indenture Trustee shall not exercise any of the Owner Trustee's rights under the Japanese Financing Documents that have been assigned to the Indenture Trustee pursuant to the Indenture except as provided therein and in this Section 15. The Indenture Trustee consents to the performance by the Owner Trustee of the Owner Trustee's obligations under Sections 15(e) and 15(f) hereof and to the Original Head Lessee's and the Parent Guarantor's rights set forth therein. (h) Without limiting the foregoing, the Original Head Lessee and the Parent Guarantor hereby jointly and severally agree to procure the performance by the Japanese Lessee of its obligation to pay to the Japanese Lessor the Special Termination Payment (as defined in the Japanese Lease) in full when due upon any termination of the Japanese Lease pursuant to the provisions thereof. In furtherance thereof the Parent Guarantor has charged in favor of the Indenture Trustee an amount equal to the amount needed to fully satisfy the Japanese Lessee's obligation to make such Special Termination Payment to the Japanese Lessor, and authorizes and instructs the Indenture Trustee to exercise the rights of the Chargee under and as defined in the Yen Deposit Charge Agreement upon any termination of the Japanese Lease and the Special Termination Payment becoming due. The Original Head Lessee and the Parent Guarantor do hereby confirm to and agree with the Owner Trustee and the Indenture Trustee that (i) the Lease is and shall be deemed to be an Affiliated Sublease as defined in the Japanese Financing Documents and for the purpose of Section 14(j) of the Japanese Lease and (ii) upon the occurrence of an Event of Default under the Lease and the Lease having been declared or deemed in default and the exercise of one or more remedies under the Lease, the Indenture Trustee (so long as the Lien of the Indenture has not been discharged) and, if the Lien of the Indenture shall have been discharged, the Owner Trustee is hereby authorized, in their sole and absolute discretion, to deliver the certificate referred to in such Section 14(j) of the Japanese Lease and/or effect a voluntary termination of the Japanese Lease pursuant to the provisions - 61 - 65 thereof and in connection therewith to cause the Cash Deposit to be applied to the payment due to the Japanese Lessor thereunder. The Indenture Trustee agrees that upon the discharge of the Lien of the Indenture it shall, if the Yen Deposit Agreement and the Yen Deposit Charge Agreement are still in effect, assign to the Owner Trustee its rights as Chargee under the Yen Deposit Charge Agreement. The Owner Trustee and Indenture Trustee hereby agree to release or cause the release to the Parent Guarantor of any amounts consisting of the Cash Deposit or otherwise covered by the Yen Deposit Agreement or Yen Deposit Charge Agreement in excess of the Special Termination Payment amount from time to time and acknowledge and agree that such charges and agreements will be deemed released upon the expiration of the Japanese Lease, or the termination thereof and payment of the Special Termination Payment. (i) The Lessee agrees with the Original Head Lessee, the Owner Trustee, the Indenture Trustee, GPA Offshore and the Parent Guarantor that the Lessee will perform all of its covenants and obligations under the Lease, including Section 12(a) thereof, for the purposes of ensuring compliance with corresponding obligations under the Japanese Lease. (j) The Owner Participant hereby directs the Owner Trustee, and the Owner Trustee hereby agrees to pay to the Parent Guarantor, after payment to the Owner Participant of the OP SLV Amount set forth in Schedule IV hereto, the GPA SLV Amount set forth on Schedule V hereto from all and any amounts paid payable to the Owner Trustee or the Owner Participant upon the occurrence of an Event of Loss. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. - 62 - 66 SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, addressed to it at ____________________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be - 63 - 67 designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 450 West 33rd Street, New York, New York 10001 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise - 64 - 68 provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee and the Subordination Agent, (B) Kelley Drye & Warren LLP, special counsel for the Indenture Trustee, (C) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (D) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (E) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Morgan, Lewis & Bockius LLP, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and - 65 - 69 warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Aircraft from the lien of the Indenture and the termination of the Indenture pursuant to and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. - 66 - 70 (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 67 - 71 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:______________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA SUB I, INC. By:______________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:______________________________ Name: Title: Address: GPA House Shannon, County Clare Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 68 - 72 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:______________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [-----------------------------] By:______________________________ Name: Title: Address: Telephone: Telecopier: Attention: THE CHASE MANHATTAN BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________ Name: Title: Address: 450 West 33rd Street New York, New York 10001 Telephone: (212) 946-3348 Telecopier: (212) 946-8160 Attention: Corporate Trust Department - 69 - 73 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:______________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 70 - 74 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 75 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price ------ ------ ---- ---- ----- Class A $ 11,936,662 02-Jan-2006 6.85% $ 11,936,662 Class B $ 4,476,246 02-Jul-2002 6.93% $ 4,476,246 Class C $ 4,476,247 02-Jan-2002 6.86% $ 4,476,246 Class D $ 3,575,831 02-Jul-98 8.16% $ 3,575,831
76 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 77 SCHEDULE IV to Refunding Agreement OP SLV AMOUNT [to come] 78 SCHEDULE V to Refunding Agreement GPA SLV AMOUNT [to come] 79 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-6] TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-6], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, [______________________], a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1989 BN-6], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Second Amended and Restated 80 Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. - 2 - 81 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or - 3 - 82 accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand - 4 - 83 therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding except as required by law or regulation. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required (provided that the recipients of any payments hereunder shall not be entitled to receive any greater amount than if Transferee had made such payment). 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any - 5 - 84 lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; (g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and (h) the Guarantor is [type of legal personality] with a net worth of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of - 6 - 85 any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 7 - 86 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 8 - 87 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-6] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-6] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, [___________________], Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Second Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Second Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Second Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust 88 Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. - 2 - 89 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) on the date hereof it is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a net worth of not less than $60,000,000. 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. - 3 - 90 IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:______________________________ Title: [ASSIGNEE] By:______________________________ Title: - 4 - 91 EXHIBIT C to REFUNDING AGREEMENT LIST OF COUNTRIES Australia Canada Denmark Finland France Germany Iceland Ireland Luxembourg Netherlands New Zealand Norway Singapore South Korea Sweden Switzerland United Kingdom 92 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 93 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) Trust Agreement Supplement [GPA 1989 BN-6] No. 3 dated November 26, 1996 (the "Trust Agreement Supplement") between the Owner Trustee and the Owner Participant, amending the Trust Agreement, which Trust Agreement Supplement was filed at 12:20 p.m., C.S.T. on November 26, 1996; (b) Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 3 [GPA 1989 BN-6] dated November 26, 1996 (the "Indenture Supplement"), with respect to the Aircraft, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (c) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as successor lessee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (d) Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] dated as of December 15, 1989, amended and restated as of October 1, 1991 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease with Lease Supplement [GPA 1989 BN-6] No. 3 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Aircraft, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. - 1 - 94 Trust Agreement Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989 between [_____________________], as owner participant, and Wilmington Trust Company, as owner trustee, as supplemented by Trust Agreement Supplement [GPA 1989 BN-6] No. 1 dated December 22, 1989 and by Trust Agreement Supplement [GPA 1989 BN- 6] No. 2 dated October 24, 1991. Japanese Lease, Japanese Lessor and Supplemental Agreement Lease Agreement [GPA 1989 BN-6] dated as of September 28, 1989 between FG Vision Leasing Co., Ltd. (the "Japanese Lessor"), as lessor, and Air Tara Caymans II, Limited, as original lessee, which was recorded by the Federal Aviation Administration on September 29, 1989 and assigned Conveyance No. G75383, as supplemented and assigned by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Lease Supplement No. 1 09/29/89 09/29/89 G75383 Supplemental Agree- ment (the "Supple- as of mental Agreement") 09/28/89 09/29/89 G75383 Lease Assignment between Air Tara Caymans II, Limited, as assignor, and GPA Leasing USA Sub I, Inc., as as of assignee 09/28/89 09/29/89 G75383
- 2 - 95
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Lease Assignment No. 2 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust Company as owner trustee under Trust Agreement [GPA 1989 BN-6] dated as of December 15, as of 1989, as assignee 12/15/89 04/02/90 V79846
Original Indenture Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of December 15, 1989 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989, and The Chase Manhattan Bank, as successor by merger to Chemical Bank, formerly Manufacturers Hanover Trust Company, as indenture trustee, which was recorded by the Federal Aviation Administration on April 2, 1990 and assigned Conveyance No. V79847, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Trust Indenture Supplement No. 1 12/22/89 04/02/90 V79847 Amended and Restated Trust Indenture and Security Agreement as of [GPA 1989 BN-6] 10/01/91 11/12/91 Z91423 Trust Indenture Supplement No. 2 [GPA 1989 BN-6] 10/24/91 11/12/91 Z91423
- 3 - 96 Original Head Lease Aircraft Lease Agreement [GPA 1989 BN-6] dated as of December 15, 1989 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as lessor, and GPA Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation Administration on April 2, 1990 and assigned Conveyance No. V79848, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Lease Supplement [GPA 1989 BN-6] No. 1 12/22/89 04/02/90 V79848 Amended and Restated Aircraft Lease Agree- as of ment [GPA 1989 BN-6] 10/01/91 11/12/91 Z91424 Lease Supplement [GPA 1989 BN-6] No. 2 10/24/91 11/12/91 Z91424
Sublease Aircraft Sublease Agreement [GPA 1989 BN-6] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on October 12, 1990 and assigned Conveyance No. AA45592, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Sublease Supplement No. 1 09/28/90 10/12/90 AA45592 Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989 as of BN-6] 06/25/91 07/10/91 A43607 Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989 as of BN-6] 08/26/91 09/17/91 C24403
Sublease Collateral Assignment Assignment of Sublease [GPA 1989 BN-6] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as - 4 - 97 assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as assignee, which was attached to and recorded as one instrument with the Sublease on October 12, 1990 and assigned Conveyance No. AA45592, as amended by Amendment No. 1 to Assignment of Sublease [GPA 1989 BN-6] dated as of October 1, 1991, which was recorded by the Federal Aviation Administration on November 12, 1991 and assigned Conveyance No. Z91425. - 5 - EX-4.13 14 FORM OF REFUNDING AGREEMENT [GPA 1989 BN-10] 1 EXHIBIT 4.13 REFUNDING AGREEMENT [GPA 1989 BN-10] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA SUB I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements [____________________________], as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and THE CHASE MANHATTAN BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 77 Registration No. N631AW Leased by America West Airlines, Inc. 2 TABLE OF CONTENTS Page ---- SECTION 1. Purchase of Equipment Notes; Refunding........................ 5 SECTION 2. Equipment Notes............................................... 8 SECTION 3. Conditions Precedent.......................................... 8 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee................................................. 16 SECTION 5. Amendment and Restatement of the First Amended and Restated Indenture.................................. 19 SECTION 6. Amendment and Restatement of the First Amended and Restated Lease...................................... 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc............................ 20 SECTION 8. Representations and Warranties of the Lessee.................. 20 SECTION 9. Representations and Warranties................................ 25 SECTION 10. Transfer of Owner Participant's Interest..................... 41 SECTION 11. Re-Registration of the Aircraft.............................. 44 SECTION 12. Quiet Enjoyment.............................................. 47 SECTION 13. Liens........................................................ 48 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant............ 50 SECTION 15. Certain Retained Rights and Releases......................... 53 SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee................................... 55 SECTION 17. Lessee Protection of Title................................... 55 SECTION 18. Jurisdictional and Related Matters........................... 55 SECTION 19. Limitation on Recourse....................................... 56 - i - 3 Page ---- SECTION 20. Notices...................................................... 57 SECTION 21. Expenses..................................................... 57 SECTION 22. Reliance of Liquidity Provider............................... 58 SECTION 23. Miscellaneous................................................ 58 SECTION 24. Governing Law................................................ 59 SECTION 25. Effectiveness................................................ 59 Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1989 BN-10] REFUNDING AGREEMENT [GPA 1989 BN-10] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) [_______________ __________], a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the four separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Manufacturers Hanover Trust Company and The Mitsubishi Trust and Banking Corporation, as Lenders (the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1989 BN- 10], dated as of December 19, 1989 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one Airbus A320-231 aircraft (the "Aircraft"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1989 BN-10], dated as of December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 [GPA 1989 BN- 5 10], dated December 22, 1989 (as so supplemented, the "Original Indenture"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-10], dated as of December 19, 1989, as supplemented by Lease Supplement [GPA 1989 BN-10] No. 1 dated December 22, 1989 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1989 BN-10] dated as of December 19, 1989 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1989 BN-10], dated as of December 19, 1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-10] No. 1 dated December 22, 1989, and as further supplemented by Trust Agreement Supplement [GPA 1989 BN- 10] No. 2 dated October 24, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of December 19, 1989 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); WHEREAS, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1989 BN-10] dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1989 BN-10] dated September 28, 1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-10] dated as of June 25, 1991 and Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989 BN-10] dated as of August 26, 1991 (as amended, supplemented or - 2 - 6 otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1989 BN-10] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of the Original Head Lessee under Section 21(f) of the Sublease; WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease and Sublessee Consent and Agreement [GPA 1989 BN-10] dated as of September 21, 1990, as amended by Amendment No. 1 to Assignment of Sublease and Sublessee Consent and Agreement [GPA 1989 BN-10] dated as of October 1, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, in connection with the Term Refunding (as defined in the Participation Agreement), the Original Head Lessee, the Parent Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee entered into Amendment No. 1 to Participation Agreement [GPA 1989 BN-10], dated as of October 1, 1991 ("PA Amendment No. 1"); WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Trustee and the Indenture Trustee entered into the Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10], dated as of October 1, 1991, as supplemented by Trust Indenture Supplement No. 2 [GPA 1989 BN- 10], dated October 24, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Indenture"); WHEREAS, pursuant to the First Amended and Restated Indenture, the Owner Trustee issued equipment trust certificates substantially in the form set forth in Exhibit C thereof (the "Original Certificates") to the holders thereof (the "Original Certificate Holders") as evidence of the indebtedness then being made by the Owner Trustee to refinance a portion of the purchase price of the Aircraft; - 3 - 7 WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Trustee and the Original Head Lessee entered into the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10], dated as of October 1, 1991, as supplemented by Lease Supplement [GPA 1989 BN-10] No. 2, dated October 24, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Lease"); WHEREAS, concurrently with the execution and delivery of PA Amendment No. 1, the Owner Participant and the Original Head Lessee entered into the Amended and Restated Head Lease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of October 1, 1991 (as so amended and restated, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Head Lease TIA"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will further amend and restate the First Amended and Restated Indenture as the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 3 dated the Restatement Date (the "Second Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in four series, the proceeds from the issuance and sale of which will be applied in part to the redemption in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the First Amended and Restated Lease as the Second Amended and Restated Lease (as so amended and restated, the "Lease"); WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-10] No. 3 ("Trust Supplement No. 3"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Second Amended and - 4 - 8 Restated Head Lease Tax Indemnification Agreement, amending and restating the First Amended and Restated Head Lease TIA (as so amended and restated, the "Second Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, four separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: - 5 - 9 (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates to but not including the Restatement Date plus an amount equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.16(b)(ii) of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to (A) the unpaid principal amount of the Original Certificates and (B) the amounts specified in clause (i)(B) of this Section 1 (collectively, the "Aggregate Redemption Amount"); (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the Aggregate Redemption Amount owing to them on the Restatement Date with respect to the Original Certificates as a redemption of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 3); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 3; (ix) the Original Head Lessee and the Owner Participant shall enter into the Second Amended and - 6 - 10 Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" aircraft to the Lessee and the obligation of the Lessee to accept and lease such aircraft (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee have entered into the - 7 - 11 Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture - 8 - 12 Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; (3) Trust Supplement No. 3; (4) the Second Amended and Restated Indenture and Trust Indenture Supplement No. 3; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the - 9 - 13 Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (1), (5) and (6) below, a certificate signed by an authorized officer of the Lessee and, in the case of (2), (3) and (4) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness and has a current, valid certificate of airworthiness; (2) the Second Aircraft FAA Bill of Sale (as defined in the Participation Agreement), the Original Lease, the First Amended and Restated Lease, the Original Indenture and the First Amended and Restated Indenture have each been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (3) Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, the Second Amended and Restated Indenture, Trust Indenture Supplement No. 3 and Trust Supplement No. 3 covering the Aircraft shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; (4) the Aircraft has been registered with the FAA in the name of the Owner Trustee; (5) the Lessee has authority to operate the Aircraft; and (6) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in - 10 - 14 which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; - 11 - 15 (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from - 12 - 16 the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized officer of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President- Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Kelley Drye & Warren LLP, special counsel for the Indenture Trustee, and (ii) Shipman & Goodwin LLP, special counsel for the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Morgan, Lewis & Bockius LLP, special counsel for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) - 13 - 17 White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Original Head Lessee, the Lessee, GPA Leasing USA I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Second Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. - 14 - 18 (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the Lease. (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Second Amended and Restated Lease (including Lease Supplement No. 3) and the Second Amended and Restated Indenture (including Trust Indenture Supplement No. 3) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, the - 15 - 19 Second Amended and Restated Indenture, Trust Indenture Supplement No. 3 and Trust Supplement No. 3. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; (3) the Second Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); - 16 - 20 (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Second Amended and Restated Lease and Lease Supplement No. 3; - 17 - 21 (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. - 18 - 22 (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the First Amended and Restated Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Second Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Second Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the Second Amended and Restated Indenture. The Second Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the First Amended and Restated Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the First Amended and Restated Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Second Amended and Restated Lease shall be effective as of the Restatement Date. - 19 - 23 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect on and after the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any - 20 - 24 trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect, (B) the registration of the Aircraft pursuant to the Federal Aviation Act and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the - 21 - 25 Lease, as may be limited by applicable laws which may affect the remedies provided in the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 3, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no - 22 - 26 further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which - 23 - 27 the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings do not involve any material danger to the sale, forfeiture or loss of the Aircraft; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Aircraft under the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Aircraft. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and - 24 - 28 warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a corporation duly incorporated, validly existing and in good standing under the laws of the State of New York, is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (as so defined, a "Citizen of the United States") (without making use of a voting trust, voting powers agreement or similar arrangement), will notify promptly all parties to this Agreement if in its reasonable opinion its status as a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement) is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Indenture promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement), and has the full corporate power, authority and legal right under the laws of the State of New York and the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party have been duly authorized by the Indenture Trustee and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable - 25 - 29 against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; (5) there are no Lenders' Liens (as defined in the Lease) on the Aircraft or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (6) it has possession of the chattel paper original counterpart of the Original Lease, the First Amended and Restated Lease, Lease Amendment No. 1 and the Second Amended and Restated Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 3, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; - 26 - 30 (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 3 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 3, the Original Indenture, the First Amended and Restated Indenture, the Indenture, the Original Lease, the First Amended and Restated Lease, Lease Amendment No. 1, the Lease, the Equipment Notes or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions - 27 - 31 contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States of America governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes, or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; - 28 - 32 (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of Delaware or any political subdivision thereof in connection with the redemption of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; (10) both its chief executive office, and the place where its records concerning the Aircraft and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto; and (11) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the - 29 - 33 corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Second Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust Supplement No. 3 have been duly authorized, executed and delivered by it; and this Agreement, the Trust Agreement, the SLV Letter Agreement and the Second Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Second Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Second Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than the laws, rules or regulations - 30 - 34 relating to aircraft lease transactions generally or to the citizenship requirements of the Owner Participant under the Federal Aviation Act); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Second Amended and Restated Head Lease TIA; (5) neither the Owner Participant nor anyone authorized by it to act on its behalf (it being understood that in proposing, facilitating and otherwise taking any action in connection with the refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Equipment Notes or Certificates or any interest in and to the Trust Estate, the Trust Agreement or any similar interest for sale to, or solicited any offer to acquire any of the same from, more than ten Persons; the Owner Participant's interest in the Trust Estate and the Trust Agreement was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens); and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). If at any time Owner Participant has ceased to be, or shall have actual knowledge that it is likely to cease to be, such a citizen, and (i) the Aircraft shall be or would thereupon become ineligible for registration in the name of Owner Trustee under the Federal Aviation Act as in effect at such time (without regard to the "based and primarily used" provisions thereof) and the regulations then applicable thereunder, or (ii) the Aircraft is registered in a jurisdiction other than the United States of America, in circumstances in which the preceding clause (i) does not apply and the Lessee or - 31 - 35 any Permitted Sublessee at any time proposes to register the Aircraft in the United States of America, then Owner Participant shall (at its own expense and without any reimbursement or indemnification from the Lessee or any Permitted Sublessee) (A) immediately either (1) transfer in accordance with Section 10 hereof all of its right, title and interest in and to the Trust Agreement, the Trust Estate, this Agreement and the Second Amended and Restated Head Lease TIA or (2) take such other action, including, without limitation, the establishment of a voting trust or voting powers agreement (in which case Owner Participant shall remain the beneficial owner of the Trust Estate), as may be necessary to prevent the deregistration of the Aircraft under the Federal Aviation Act or to maintain such registration of the Aircraft or to make possible such registration of the Aircraft in the United States of America and to prevent Indenture Trustee, the Holders of the Equipment Notes, the Lessee or any Permitted Sublessee from being adversely affected as a result thereof and (B) indemnify the Lessee, the Indenture Trustee, the Holders of the Equipment Notes and any Permitted Sublessee, from and against any and all Claims incurred or suffered as a result of Owner Participant's failure to be such a citizen or loss of such citizenship, including, without limitation, as a result of the Aircraft's becoming ineligible or ceasing to remain eligible for such registration. (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will - 32 - 36 constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation - 33 - 37 received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, - 34 - 38 nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the - 35 - 39 Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in - 36 - 40 the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Second Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any - 37 - 41 court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Aircraft free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Aircraft, and Permitted Liens under the Original Lease; (7) title to the Buyer Furnished Equipment for the Aircraft has been transferred to the Owner Trustee in accordance with Section 8(y) of the Participation - 38 - 42 Agreement. As of the Restatement Date, there are no existing Claims against Parent Guarantor or Original Head Lessee with respect to Buyer Furnished Equipment; and (8) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 3, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease. (g) The Parent Guarantor represents and warrants that: - 39 - 43 (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part - 40 - 44 shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty in Section 9(f)(8) shall be only for the benefit of Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by consolidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom; provided that, subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank or other financial institution with a combined capital, surplus and undivided profits of at least $60,000,000, or a corporation whose consolidated tangible net worth is at least $60,000,000, exclusive of goodwill, all of the foregoing determined in accordance with U.S. generally accepted accounting principles, (B) any wholly-owned subsidiary of such bank, financial institution or corporation if such bank, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) an Affiliate or a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such Affiliate's or subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to - 41 - 45 which Owner Participant is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and does not violate clause (viii) below; provided that if such Transferee is an Affiliate of Owner Participant, such notice may be given promptly following rather than prior to such transfer; (iii) upon giving effect to such transfer, such Transferee is a Citizen of the United States, and such Transferee shall deliver to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an affidavit to such effect; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not and will not involve, either directly or indirectly, the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA that would cause a violation of any provision of ERISA or the imposition of an excise tax under the Code; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, a freight trans- - 42 - 46 porter, any Person engaged in the business of parcel transport by air, or a subsidiary or an Affiliate thereof; (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Second Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Aircraft previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Second Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Second Amended and Restated Head Lease TIA by or against Owner Participant which have been made prior to the date of such transfer. The transferor Owner Participant shall pay all expenses of each party hereto related to any such transfer. Owner Participant covenants and warrants that it shall not transfer all or any portion of its interest in the Trust Estate except in accordance with this Section 10 and that it shall not itself, or direct Owner Trustee to, take any action in contravention of the Lessee's rights under the Lease except in accordance with the provisions of the Lease. - 43 - 47 Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (7) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. The Lessee shall have no obligation to prevent any such deregistration or assist in maintaining or otherwise enhancing the Aircraft's eligibility for registration by restricting the use of the Aircraft. SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee agrees, that if the Owner Participant consents thereto, which consent shall not be unreasonably withheld, at any time after the Restricted Use Period, Lessee may, in connection with effecting a Permitted Sublease elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit C hereto (or such other country as the Owner Participant approves) (each, an "Eligible Country") and (b) the following conditions are met: (i) unless the country of registry is Taiwan, the United States of America maintains normal diplomatic relations with the country of registry of the Aircraft, and if the country of registry is Taiwan, the United States of America maintains diplomatic relations at least as good as those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner Participant and the Indenture Trustee shall have received favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably acceptable to the Owner Participant to the effect of the following and as to such other matters as the Owner Participant may reasonably request: (A) the Owner Trustee's ownership interest in the Aircraft and interest in the Lease and any Permitted Sublease shall be recognized under the laws of such Eligible Country, (B) the obligations of Lessee, and the rights and remedies of the Owner Trustee, under the Lease shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such Eligible Country (or the laws of the jurisdiction to which the laws of such Eligible Country would refer as the applicable governing law), (C) after giving effect to such change in registration, the Lien of the Indenture on the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and any Permitted Sublease shall continue as a valid and - 44 - 48 duly perfected security interest and all filing, recording or other action necessary to protect the same shall have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording or other action is necessary and (2) the Owner Trustee and the Indenture Trustee shall have received a certificate from Lessee that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be delivered to the Owner Trustee and the Indenture Trustee on or prior to the effective date of such change in registration), (D) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Owner Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate thereof), as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such Eligible Country, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such Eligible Country (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), (F) (unless Lessee shall have agreed, or pursuant to the Lease shall have been required, to provide insurance covering the risk of requisition of use of such Aircraft by the government of such Eligible Country so long as such Aircraft is registered under the laws of such Eligible Country) the laws of such jurisdiction require fair compensation by the government of such Eligible Country payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use, (G) upon such change in registration, under the laws of such Eligible Country, any import or export permits necessary to take the Aircraft into or out of such Eligible Country and any foreign exchange or other like permits or approvals necessary to allow all "basic rent", "renewal rent" and casualty value payments provided for in such Permitted Sublease, which are obtainable at the commencement of such Permitted Sublease, will be in full force and effect, - 45 - 49 (H) under the Laws of such Eligible Country, the remedies set forth in such Permitted Sublease are effective to enable Lessee or its assignee as sublessor to repossess, subject to compliance with applicable Law in such Eligible Country in connection therewith, the Aircraft following a valid termination thereof, and there is no provision of such Laws which by its terms would prevent Lessee or its assignee as sublessor, upon compliance with the provisions of applicable Law in such Eligible Country, from de-registering the Aircraft under the laws of such Eligible Country, and exporting the Aircraft from such Eligible Country, without reference to any particular time period, (I) upon such change in registration, the resulting jurisdiction of one or more Governmental Entities of such Eligible Country over Lessee, Owner Trustee, Indenture Trustee, the Permitted Sublessee, the Aircraft or the operation or operator of the Aircraft (or over any interest in any thereof), as the case may be, and the consummation of the transactions contemplated by the Operative Documents after giving effect to the proposed re-registration of the Aircraft, do not violate any provision of the Trading with the Enemy Act of 1917, as amended, or any Executive Orders of the President of the United States of America or any regulations of the United States Treasury Department (including, without limitation, the Foreign Assets Control Regulations and the Transaction Control Regulations issued thereunder) or of any other Governmental Entity of the United States of America issued thereunder or otherwise violate any other like law or regulation of the United States of America, after giving effect to any licenses, permits or approvals thereunder obtained by, or on behalf of, Lessee, the Permitted Sublessee, Owner Trustee or Indenture Trustee, all of which are in full force and effect as of the date of such change in registration. Owner Trustee, Owner Participant and Indenture Trustee shall cooperate, at Lessee's expense and as it may reasonably request, in obtaining any such licenses, permits or approvals, (J) to such further effect with respect to such other matters relating to the recognition of Owner Trustee's interest in the Aircraft and perfection of the Lien of the Indenture if it has not been discharged pursuant to the terms thereof, as Owner Trustee, Owner Participant or Indenture Trustee may reasonably request, and (K) the aircraft maintenance standards of the new country of registry shall not be materially less stringent than those of the FAA or not materially less stringent than those of the United Kingdom Civil Aviation Authority. - 46 - 50 The following statement shall be true and correct at the time of the re-registration of the Aircraft: No unindemnified tax risks or Taxes affecting Owner Participant or Owner Trustee will result from such reregistration. Prior to the re-registration of the Aircraft as contemplated by this Section 11, Lessee shall furnish to Owner Participant and Indenture Trustee (1) an Officer's Certificate (as defined in the Indenture) stating that (i) all conditions precedent provided for in this Agreement and the Lease relating to the proposed re-registration of the Aircraft have been complied with, (ii) that the re-registration is in conformity with the requirements of this Agreement and the Lease, (iii) after giving effect to such re-registration, no Event of Default shall have occurred and be continuing, and (iv) the insurance required by Section 12 of the Lease is in full force and effect at the time of such change in registration after giving effect to such change in registration and (2) an opinion of counsel (which shall be by counsel other than an employee of Lessee) addressed to Owner Trustee, Owner Participant and Indenture Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. The Operative Documents shall be amended in a manner reasonably satisfactory to Lessee, Owner Trustee and Indenture Trustee so as to include such covenants as may be appropriate to establish, protect and preserve the validity, priority and perfection of Owner Trustee's interest in the Aircraft, Lessee's interest under the Lease and the Lien of the Indenture in favor of Indenture Trustee. Lessee shall pay all costs, expenses, fees and recording, registration or any other Taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft under the Lease, and all rents, revenues, profits - 47 - 51 and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien - 48 - 52 or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of the Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor, or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor, or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. - 49 - 53 In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien (including, without limitation, Claims against Lessor and Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement and (iii) not to terminate or revoke the Trust Agreement. (b) Notwithstanding anything to the contrary in the Trust Agreement, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 45 days' prior notice thereof and (B) if, within 45 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Second Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Second Amended and Restated Head Lease TIA shall waive indemnification under Section - 50 - 54 10 of the Lease or applicable provision of the Second Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made, and (D) such change does not affect the registration of the Aircraft. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or the Indenture Trustee may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold - 51 - 55 harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis from and against any increase in Taxes borne by such Person that results from such change in situs. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay expenses relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was at the request of the Owner Participant. (e) The Trust Company agrees that if at any time it shall obtain actual knowledge that it has ceased to be or will likely cease to be a Citizen of the United States, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under such Federal Aviation Act or any other law to permit the continued registration of the Aircraft in the name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship would have any material adverse effect on any holder of Equipment Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of the successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement. - 52 - 56 SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Second Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all obligations and liabilities under the Sublease Guaranty, other than in respect of the obligations and liabilities of the Original Head Lessee in respect of Sublessor's Liens as provided above. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: (i) Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor and (ii) the Lessee shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) - 53 - 57 the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding) the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and - 54 - 58 Obligations and except in respect of the Second Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head - 55 - 59 Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, addressed to it at _______________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 450 West 33rd Street, New York, New York 10001 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein - 56 - 60 by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee and the Subordination Agent, (B) Kelley Drye & Warren LLP, special counsel for the Indenture Trustee, (C) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (D) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (E) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Morgan, Lewis & Bockius LLP, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the - 57 - 61 Indenture Trustee, the Owner Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or - 58 - 62 provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Aircraft from the lien of the Indenture and the termination of the Indenture pursuant to and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 59 - 63 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:______________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA SUB I, INC. By:______________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:______________________________ Name: Title: Address: GPA House Shannon, County Clare Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 60 - 64 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:______________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [_________________________] By:______________________________ Name: Title: Address: Telephone: Telecopier: Attention: - 61 - 65 THE CHASE MANHATTAN BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________ Name: Title: Address: 450 West 33rd Street New York, New York 10001 Telephone: (212) 946-3348 Telecopier: (212) 946-8160 Attention: Corporate Trust Department FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:______________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 62 - 66 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 63 - 67 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 68 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price - ------------ ----------- ----------- -------- ------------ Class A $11,936,662 02-Jan-2006 6.85% $ 11,936,662 Class B $ 4,476,246 02-Jul-2002 6.93% $ 4,476,246 Class C $ 4,476,247 02-Jan-2002 6.86% $ 4,476,246 Class D $ 3,575,831 02-Jul-98 8.16% $ 3,575,831
69 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 70 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-10] TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-10], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, [______________________], a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1989 BN-10], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 71 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Second Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or right of set-off held by any Beneficiary for the payment of the - 2 - 72 Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the - 3 - 73 Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in - 4 - 74 accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding except as required by law or regulation. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required (provided that the recipients of any payments hereunder shall not be entitled to receive any greater amount than if Transferee had made such payment). 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to - 5 - 75 perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; (g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and - 6 - 76 (h) the Guarantor is [type of legal personality] with a net worth of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. - 7 - 77 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 78 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 79 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-10] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-10] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, [____________________], Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Second Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Second Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Second Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 80 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and compromise at the expense of Assignee any and all actions, suits - 2 - 81 or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) on the date hereof it is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a net worth of not less than $60,000,000. - 3 - 82 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. - 4 - 83 IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:___________________________________ Title: [ASSIGNEE] By:___________________________________ Title: - 5 - 84 EXHIBIT C to REFUNDING AGREEMENT LIST OF COUNTRIES Australia Canada Denmark Finland France Germany Iceland Ireland Japan Luxembourg Netherlands New Zealand Norway Singapore South Korea Sweden Switzerland United Kingdom 85 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 86 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) Trust Agreement Supplement [GPA 1989 BN-10] No. 3 dated November 26, 1996 (the "Trust Agreement Supplement") between the Owner Trustee and the Owner Participant, amending the Trust Agreement, which Trust Agreement Supplement was filed at 12:20 p.m., C.S.T. on November 26, 1996; (b) Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 3 [GPA 1989 BN-10] dated November 26, 1996 (the "Indenture Supplement") , with respect to the Aircraft, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (c) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as successor lessee, and the Indenture Trustee, which (i) assigns all right, title and interest of the original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (d) Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] dated as of December 19, 1989, amended and restated as of October 1, 1991 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease with Lease Supplement [GPA 1989 BN-10] No. 3 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Aircraft, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. 87 Trust Agreement Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989 between [____________________], as owner participant, and Wilmington Trust Company, as owner trustee, as supplemented by Trust Agreement Supplement [GPA 1989 BN-10] No. 1 dated December 22, 1989 and Trust Agreement Supplement [GPA 1989 BN-10] No. 2 dated October 24, 1991. Original Indenture Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of December 19, 1989 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989, and The Chase Manhattan Bank, as successor by merger to Chemical Bank, formerly Manufacturers Hanover Trust Company, as indenture trustee, which was recorded by the Federal Aviation Administration on December 27, 1989 and assigned Conveyance No. S86321, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------------------------------------- Trust Indenture Supplement No. 1 12/22/89 12/27/89 S86321 Amended and Restated Trust Indenture and Security Agreement as of [GPA 1989 BN-10] 10/01/91 10/25/91 Q52003 Trust Indenture Supplement No. 2 [GPA 1989 BN-10] 10/24/91 10/25/91 Q52003
Original Head Lease Aircraft Lease Agreement [GPA 1989 BN-10] dated as of December 19, 1989 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as lessor, and GPA Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation Administration on December 27, 1989 and assigned Conveyance No. S86322, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------------------------------------- Lease Supplement [GPA 1989 BN-10] No. 1 12/22/89 12/27/89 S86322
Amended and Restated - 2 - 88 Aircraft Lease Agree- as of ment [GPA 1989 BN-10] 10/01/91 10/25/91 Q52004 Lease Supplement [GPA 1989 BN-10] No. 2 10/24/91 10/25/91 Q52004
Sublease Aircraft Sublease Agreement [GPA 1989 BN-10] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on October 2, 1990 and assigned Conveyance No. F53827, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------------------------------------- Sublease Supplement No. 1 09/28/90 10/02/90 F53827 Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989 as of BN-10] 06/25/91 07/15/91 X116207 Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989 as of BN-10] 08/26/91 09/11/91 KK15641
Sublease Collateral Assignment Assignment of Sublease and Sublessee Consent and Agreement [GPA 1989 BN-10] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as assignee, which was attached to and recorded as one instrument with the Sublease on October 2, 1990 and assigned Conveyance No. F53827, as amended by Amendment No. 1 to Assignment of Sublease and Sublessee Consent and Agreement [GPA 1989 BN-10] dated as of October 1, 1991, which was recorded by the Federal Aviation Administration on October 25, 1991 and assigned Conveyance No. Q52005. - 3 - EX-4.14 15 FORM OF REFUNDING AGREEMENT [GPA 1989 BN-12] 1 Exhibit 4.14 - -------------------------------------------------------------------------------- REFUNDING AGREEMENT [GPA 1989 BN-12] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA SUB I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements [----------------------------], as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and THE CHASE MANHATTAN BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 82 Registration No. N633AW Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
Page ---- SECTION 1. Purchase of Equipment Notes; Refunding......................... 5 SECTION 2. Equipment Notes................................................ 7 SECTION 3. Conditions Precedent........................................... 7 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee...................................................... 15 SECTION 5. Amendment and Restatement of the Original Indenture........................................... 19 SECTION 6. Amendment and Restatement of the Original Lease............................................... 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc.......................................................... 19 SECTION 8. Representations and Warranties of the Lessee....................................................... 19 SECTION 9. Representations and Warranties................................. 24 SECTION 10. Transfer of Owner Participant's Interest..................................................... 41 SECTION 11. Re-Registration of the Aircraft................................ 44 SECTION 12. Quiet Enjoyment................................................ 47 SECTION 13. Liens ......................................................... 47 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant........................................ 49 SECTION 15. Certain Retained Rights and Releases........................... 52
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Page ---- SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee........................ 54 SECTION 17. Lessee Protection of Title..................................... 54 SECTION 18. Jurisdictional and Related Matters............................. 55 SECTION 19. Limitation on Recourse......................................... 56 SECTION 20. Notices .................................................... 56 SECTION 21. Expenses .................................................... 56 SECTION 22. Reliance of Liquidity Provider................................. 57 SECTION 23. Miscellaneous.................................................. 58 SECTION 24. Governing Law.................................................. 59 SECTION 25. Effectiveness.................................................. 59
Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1989 BN-12] REFUNDING AGREEMENT [GPA 1989 BN-12] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) [________________ _____________], a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the four separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Manufacturers Hanover Trust Company and The Mitsubishi Trust and Banking Corporation, Grand Cayman Branch, as Lenders (collectively, the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1989 BN-12], dated as of December 19, 1989 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one Airbus A320-231 aircraft (the "Aircraft"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1989 BN-12], dated as of December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated December 5 28, 1989 (as amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued loan certificates substantially in the form set forth in Section 2.02 thereof (the "Original Certificates") to the Lenders as evidence of the indebtedness then being made by the Owner Trustee to finance a portion of the purchase price of the Aircraft; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-12], dated as of December 19, 1989, as supplemented by Lease Supplement [GPA 1989 BN-12] No. 1 dated December 28, 1989, and as further supplemented by Lease Supplement No. 2 dated as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1989 BN-12] dated as of December 19, 1989 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1989 BN-12], dated as of December 19, 1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-12] No. 1 dated December 28, 1989 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1989 BN-12], dated as of December 19, 1989 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); WHEREAS, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, - 2 - 6 the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1989 BN-12] dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1989 BN-12] dated September 28, 1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-12] dated as of June 25, 1991, and as further amended by Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989 BN-12] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1989 BN-12] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of the Original Head Lessee under Section 21(f) of the Sublease; WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1989 BN-12], dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease [GPA 1989 BN-12] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the First Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-12], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 2 dated the Restatement Date (the "First Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in four series, the proceeds from the issuance and sale of which will be applied in part to the prepayment in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease - 3 - 7 Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the Original Lease as the Amended and Restated Lease (as so amended and restated, the "Lease"); WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-12] No. 2 ("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the Head Lease TIA (as so amended and restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, four separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, - 4 - 8 dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus an amount (the "Prepayment Amount") equal to all other amounts due to the holders of the Original Certificates under the Original Indenture, the Original Certificates and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.13 of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to the aggregate principal amount of the Original Certificates outstanding on the Restatement Date, together with accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus the Prepayment Amount; (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of - 5 - 9 principal, interest, Break Funding Cost, if any, described in clause (iii) above, owing to them on the Restatement Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 2); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 2; (ix) the Original Head Lessee and the Owner Participant shall enter into the Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" aircraft to the Lessee and the obligation of the Lessee to accept and lease such aircraft (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. - 6 - 10 (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the - 7 - 11 transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) Trust Supplement No. 2; (4) the First Amended and Restated Indenture and Trust Indenture Supplement No. 2; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the - 8 - 12 other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (1), (5) and (6) below, a certificate signed by an authorized officer of the Lessee and, in the case of (2), (3) and (4) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness and has a current, valid certificate of airworthiness; (2) the Aircraft FAA Bill of Sale (as defined in the Participation Agreement), the Original Lease (excluding Lease Supplement No. 2) and the Original Indenture have each been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49 of the United - 9 - 13 States Code relating to aviation (the "Federal Aviation Act"); (3) Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering the Aircraft shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; (4) the Aircraft has been registered with the FAA in the name of the Owner Trustee; (5) the Lessee has authority to operate the Aircraft; and (6) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and - 10 - 14 (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by- laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: - 11 - 15 (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable authority designated by the board of directors thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized representative of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the - 12 - 16 Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Kelley, Drye & Warren LLP, special counsel for the Indenture Trustee, and (ii) Shipman & Goodwin LLP, special counsel for the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Hunton & Williams, special counsel for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. - 13 - 17 (q) The Original Head Lessee, the Lessee, GPA Leasing USA I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original - 14 - 18 Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the Lease. (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Amended and Restated Lease (including Lease Supplement No. 3) and the First Amended and Restated Indenture (including Trust Indenture Supplement No. 2) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; - 15 - 19 (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form - 16 - 20 and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: - 17 - 21 (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to - 18 - 22 establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the Original Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the First Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the First Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the First Amended and Restated Indenture. The First Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the Original Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the Original Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect from and including the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the - 19 - 23 Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obliga- - 20 - 24 tions of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect, (B) the registration of the Aircraft pursuant to the Federal Aviation Act and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to - 21 - 25 materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease; - 22 - 26 (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established - 23 - 27 such reserves as are required under GAAP) so long as such proceedings or the non-payment of such Taxes do not involve any material danger to the sale, forfeiture or loss of the Aircraft; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Aircraft under the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Aircraft. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the - 24 - 28 Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a corporation duly organized, validly existing and in good standing under the laws of the State of New York, is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (as so defined, a "Citizen of the United States") (without making use of a voting trust, voting powers agreement or similar arrangement), will notify promptly all parties to this Agreement if in its reasonable opinion its status as a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement) is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Indenture promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement), and has the full corporate power, authority and legal right under the laws of the State of New York and the federal laws of the United States pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party; (2) neither the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as - 25 - 29 permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation or any judgment or order applicable to or binding on it of any United States governmental authority or agency governing the trust powers of the Indenture Trustee; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any State of New York or any United States of America governmental authority or agency regulating the trust powers of the Indenture Trustee is required for the execution and delivery of, or the carrying out by, the Indenture Trustee of any of the transactions contemplated hereby or by the Indenture, Lease Amendment No. 1 or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (6) there are no Lenders' Liens (as defined in the Lease) on the Aircraft or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and - 26 - 30 (7) it has possession of the chattel paper original counterpart of the Original Lease, Lease Amendment No. 1 and the Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 2, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may - 27 - 31 be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 2, the Original Indenture, the Indenture, the Original Lease, Lease Amendment No. 1, the Lease, the Equipment Notes, or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; - 28 - 32 (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States of America governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of Delaware or any political subdivision thereof in connection with the prepayment of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency - 29 - 33 which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; (10) both its chief executive office, and the place where its records concerning the Aircraft and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto; and (11) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust Supplement No. 2 have been duly authorized, executed and delivered by it; and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; - 30 - 34 (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than the laws, rules or regulations relating to aircraft lease transactions generally or to the citizenship requirements of the Owner Participant under the Federal Aviation Act); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the - 31 - 35 SLV Letter Agreement or the Amended and Restated Head Lease TIA; (5) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens); and (6) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). If at any time Owner Participant has ceased to be, or shall have actual knowledge that it is likely to cease to be, such a citizen, and (i) the Aircraft shall be or would thereupon become ineligible for registration in the name of Owner Trustee under the Federal Aviation Act as in effect at such time (without regard to the "based and primarily used" provisions thereof) and the regulations then applicable thereunder, or (ii) the Aircraft is registered in a jurisdiction other than the United States of America, in circumstances in which the preceding clause (i) does not apply and the Lessee or any Permitted Sublessee at any time proposes to register the Aircraft in the United States of America, then Owner Participant shall (at its own expense and without any reimbursement or indemnification from the Lessee or any Permitted Sublessee) (A) immediately either (1) transfer in accordance with Section 10 hereof all of its right, title and interest in and to the Trust Agreement, the Trust Estate, this Agreement and the Amended and Restated Head Lease TIA or (2) take such other action, including, without limitation, the establishment of a voting trust or voting powers agreement (in which case Owner Participant shall remain the beneficial owner of the Trust Estate), as may be necessary to prevent the deregistration of the Aircraft under the Federal Aviation Act or to maintain such registration of the Aircraft or to make possible such registration of the Aircraft in the United States of America and to prevent Indenture Trustee, the Holders of the Equipment Notes, the Lessee or any Permitted Sublessee from being adversely affected as a result thereof and (B) indemnify the Lessee, the Indenture Trustee, the Holders of the Equipment Notes and any Permitted Sublessee, from and against any and all Claims incurred or suffered as a result of Owner Participant's failure to be such a citizen or loss of such citizenship, including, without limitation, as a - 32 - 36 result of the Aircraft's becoming ineligible or ceasing to remain eligible for such registration. (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument - 33 - 37 to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof - 34 - 38 in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America - 35 - 39 pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the - 36 - 40 Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and - 37 - 41 (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; - 38 - 42 (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Aircraft free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Aircraft, and Permitted Liens under the Original Lease; (7) title to the Buyer Furnished Equipment for the Aircraft has been transferred to the Owner Trustee in accordance with Section 8(y) of the Participation Agreement. As of the Restatement Date, there are no existing Claims against Parent Guarantor or Original Head Lessee with respect to Buyer Furnished Equipment; and (8) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a - 39 - 43 Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; - 40 - 44 (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty with respect to Section 9(f)(8) shall be only for the benefit of the Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by operation of law, con- - 41 - 45 solidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom or permit the transfer of any of its stock in any transaction which has the practical effect of any of the foregoing; provided that, and subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions, and Owner Participant agrees for the express benefit of each party hereto that any such transfer will comply with such conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank, trust company or other like regulated financial institution with a combined capital, surplus and undivided profits of, or a corporation with a tangible net worth of, in either case at least $60,000,000, (B) any wholly-owned subsidiary of such bank, trust company, financial institution or corporation if such bank, trust company, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed trans- - 42 - 46 feree qualifies as a "Transferee" under clause (i) above and does not violate clause (viii) below; provided that if such Transferee is a subsidiary of Owner Participant, such notice may be given promptly following rather than prior to such transfer if such Transferee meets the net worth requirement set forth above on its own account without a guaranty and otherwise meets the requirements of this Section 10; (iii) upon giving effect to such transfer, such Transferee is a Citizen of the United States and such Transferee shall deliver to Lessee an affidavit to such effect; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not violate any provision of ERISA or any rules or regulations thereunder; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, any Person engaged in the business of parcel transport by air or a subsidiary or an Affiliate of such an airline, a commercial air carrier, an air freight forwarder, Person engaged in the business of parcel transport by air or other similar Person; (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the - 43 - 47 legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Aircraft previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Amended and Restated Head Lease TIA by or against Owner Participant which have accrued or been made prior to the date of such transfer. The transferor Owner Participant shall pay the reasonable expenses of each party hereto related to any such transfer. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. The Lessee shall have no obligation to prevent any such deregistration or assist in maintaining or otherwise enhancing the Aircraft's eligibility for registration by restricting the use of the Aircraft. SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee agrees, that if the Owner Participant consents thereto, which consent shall not be unreasonably withheld, at any - 44 - 48 time after the Restricted Use Period, Lessee may, in connection with effecting a Permitted Sublease elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit C hereto (or such other country as the Owner Participant approves) and (b) the following conditions are met: (i) unless the country of registry is Taiwan, the United States of America maintains normal diplomatic relations with the country of registry of the Aircraft, and if the country of registry is Taiwan, the United States of America maintains diplomatic relations at least as good as those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner Participant and the Indenture Trustee shall have received favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably acceptable to the Owner Participant to the effect of the following and as to such other matters as the Owner Participant may reasonably request: (A) the Owner Trustee's ownership interest in the Aircraft and interest in the Lease and any Permitted Sublease shall be recognized under the laws of such jurisdiction, (B) the obligations of Lessee, and the rights and remedies of the Owner Trustee, under the Lease shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such jurisdiction (or the laws of the jurisdiction to which the laws of such jurisdiction would refer as the applicable governing law), (C) after giving effect to such change in registration, the Lien of the Indenture on the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and any Permitted Sublease shall continue as a valid and duly perfected security interest and all filing, recording or other action necessary to protect the same and the Owner Trustee's ownership interest in the Aircraft shall have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording or other action is necessary and (2) the Owner Trustee and the Indenture Trustee shall have received a certificate from Lessee that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be delivered to - 45 - 49 the Owner Trustee and the Indenture Trustee on or prior to the effective date of such change in registration), (D) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Owner Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate thereof), as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), (F) (unless Lessee shall have agreed, or pursuant to the Lease shall have been required, to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (i) the insurance required by Section 12 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and the Owner Trustee and the Indenture Trustee shall have received a certificate of the type described in Section 12(f) of the Lease and (ii) the aircraft maintenance standards of the new country of registry shall not be materially less stringent from those of the United States of America or not materially less stringent from those of the United Kingdom and the Owner Trustee and the Indenture Trustee shall have received a certificate to such effect signed by the President, any Executive Vice President or any Senior Vice President of Lessee which certificate shall, as among the parties hereto, be presumed to be correct as to the matters stated therein absent conclusive evidence to the contrary. Lessee shall pay all reasonable costs, expenses, fees, and recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. - 46 - 50 SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person lawfully claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect - 47 - 51 to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of the Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien - 48 - 52 attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien (including, without limitation, Claims against Lessor and Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement except in accordance with the terms thereof, provided that any such amendment, supplement or modification shall not adversely affect the Lessee, and (iii) not to terminate or revoke the Trust Agreement except in accordance with the terms thereof, provided that any such termination or revocation shall not adversely affect the Lessee. (b) Notwithstanding anything to the contrary in the Trust Agreement or Section 14(a) hereof, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture - 49 - 53 Trustee, the Original Head Lessee and Lessee shall have been given 30 days' prior notice thereof and (B) if, within 15 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made, and (D) such change does not affect the registration of the Aircraft. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and the exclusions in the Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee - 50 - 54 and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis (subject to the exclusions set forth in Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and against any increase in Taxes borne by such Person that results from such change in situs. In no event shall any change in situs of the trust affect Original Head Lessee's rights or obligations under the Amended and Restated Head Lease TIA. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent - 51 - 55 shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay expenses on an after tax basis relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was solely at the request of the Owner Participant. (e) The Trust Company agrees that if at any time it shall obtain actual knowledge that it has ceased to be or will likely cease to be a Citizen of the United States, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under such Federal Aviation Act or any other law to permit the continued registration of the Aircraft in the name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship would have any material adverse effect on any holder of Equipment Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of the successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement. SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior - 52 - 56 to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all obligations and liabilities under the Sublease Guaranty, other than in respect of the obligations and liabilities of the Original Head Lessee in respect of Sublessor's Liens as provided above. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor, shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to (but excluding) the Restatement Date and excluding the Head Lease TIA - 53 - 57 (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obliga- - 54 - 58 tions under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, addressed to it at ___________________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner - 55 - 59 Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford, Connecticut 06115 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with - 56 - 60 the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee and the Subordination Agent, (B) Kelley Drye & Warren LLP, special counsel for the Indenture Trustee, (C) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (D) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (E) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Hunton & Williams, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and - 57 - 61 warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Aircraft from the lien of the Indenture and the termination of the Indenture pursuant to and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. - 58 - 62 (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 59 - 63 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:_______________________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA SUB I, INC. By:________________________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:________________________________________ Name: Title: Address: GPA House Shannon, County Clare, Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 60 - 64 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_________________________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [__________________________________] By:_________________________________________ Name: Title: Address: Telephone: Telecopier: Attention: THE CHASE MANHATTAN BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_________________________________________ Name: Title: Address: 450 West 33rd Street New York, New York 10001 Telephone: (212) 946-3348 Telecopier: (212) 946-8160 Attention: Corporate Trust Department - 61 - 65 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:_________________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_________________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 62 - 66 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 67 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price - ------------ --------- -------- -------- -------- Class A $ 12,089,958 02-Jan-2009 6.85% $ 12,089,958 Class B $ 4,533,177 02-Jan-2008 6.93% $ 4,533,177 Class C $ 4,532,787 02-Jul-2004 6.86% $ 4,532,787 Class D $ 1,711,069 02-Jan-98 8.16% $ 1,711,069
68 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 69 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-12] TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-12], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, [________________________________], a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1989 BN-12], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 70 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or - 2 - 71 right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, - 3 - 72 Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and - 4 - 73 remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required. 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - 5 - 74 (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; [(g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for - 6 - 75 taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and]1 (h) the Guarantor is [type of legal personality] with a [combined capital, surplus and undivided profits] [tangible net worth] of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to - -------- 1 This is not applicable if Transferee is a wholly-owned subsidiary of the Owner Participant. - 7 - 76 affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 77 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 78 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-12] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-12] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, [_______________________________], Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 79 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and - 2 - 80 compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it without a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) on the date hereof it is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a [combined capital, surplus and undivided profits] [tangible net worth] of not less than $60,000,000. - 3 - 81 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:____________________________________ Title: [ASSIGNEE] By:____________________________________ Title: - 4 - 82 EXHIBIT C to REFUNDING AGREEMENT LIST OF COUNTRIES Australia Canada Denmark Finland France Germany Iceland Ireland Japan Luxembourg Netherlands New Zealand Norway Singapore South Korea Sweden Switzerland United Kingdom 83 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 84 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) Trust Agreement Supplement [GPA 1989 BN-12] No. 2 dated November 26, 1996 (the "Trust Agreement Supplement") between the Owner Trustee and the Owner Participant, amending the Trust Agreement, which Trust Agreement Supplement was filed with the FAA at 12:20 p.m., C.S.T. on November 26, 1996; (b) First Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1989 BN-12] dated November 26, 1996 (the "Indenture Supplement"), with respect to the Aircraft, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (c) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as successor lessee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (d) Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] dated as of December 19, 1989 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease, with Lease Supplement [GPA 1989 BN-12] No. 3 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Aircraft, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. Trust Agreement Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989 between [___________________________], formerly 85 [________________________], as owner participant, and Wilmington Trust Company, as owner trustee, as supplemented by Trust Supplement [GPA 1989 BN-12] No. 1 dated December 28, 1989. Original Indenture Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of December 19, 1989 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989, and The Chase Manhattan Bank, as successor by merger to Chemical Bank, formerly Manufacturers Hanover Trust Company, as indenture trustee, which was recorded by the Federal Aviation Administration on January 2, 1990 and assigned Conveyance No. V78636, as supplemented by the following described instrument:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Trust Indenture Supplement No. 1 12/28/89 01/02/90 V78636
Original Head Lease Aircraft Lease Agreement [GPA 1989 BN-12] dated as of December 19, 1989 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as lessor, and GPA Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation Administration on January 2, 1990 and assigned Conveyance No. V78637, as supplemented by the following described instrument:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Lease Supplement [GPA 1989 BN-12] No. 1 12/28/89 01/02/90 V78637 Lease Supplement [GPA 1989 BN-12] No. 2 12/31/91 (which was not filed for recordation with the FAA)
Sublease Aircraft Sublease Agreement [GPA 1989 BN-12] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on October 2, 1990 and assigned Conveyance No. E10203, as supplemented and amended by the following described instruments: - 2 - 86
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Sublease Supplement No. 1 09/28/90 10/02/90 E10203 Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989 as of BN-12] 06/25/91 07/10/91 M27023 Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989 as of BN-12] 08/26/91 10/02/91 DD001725
Sublease Collateral Assignment Assignment of Sublease [GPA 1989 BN-12] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as assignee, which was attached to and recorded as one instrument with the Sublease on October 2, 1990 and assigned Conveyance No. E10203. - 3 - EX-4.15 16 FORM OF REFUNDING AGREEMENT [GPA 1990 AWA-13] 1 Exhibit 4.15 ------------------------------------------------------------------------------ REFUNDING AGREEMENT [GPA 1990 AWA-13] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA SUB I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements [---------------------------------], as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee ------------------------------------------------------------------------------ Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 091 Registration No. N634AW Leased by America West Airlines, Inc. ------------------------------------------------------------------------------ 2 TABLE OF CONTENTS PAGE ---- SECTION 1. Purchase of Equipment Notes; Refunding......................... 5 SECTION 2. Equipment Notes................................................ 7 SECTION 3. Conditions Precedent........................................... 7 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee.................................................... 15 SECTION 5. Amendment and Restatement of the Original Indenture......................................... 19 SECTION 6. Amendment and Restatement of the Original Lease............................................. 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc........................................................ 19 SECTION 8. Representations and Warranties of the Lessee..................................................... 20 SECTION 9. Representations and Warranties................................. 25 SECTION 10. Transfer of Owner Participant's Interest................................................... 42 SECTION 11. Re-Registration of the Aircraft............................... 45 SECTION 12. Quiet Enjoyment............................................... 47 SECTION 13. Liens......................................................... 47 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant...................................... 49 SECTION 15. Certain Retained Rights and Releases.......................... 52 - i - 3 PAGE ---- SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee...................... 54 SECTION 17. Lessee Protection of Title.................................... 55 SECTION 18. Jurisdictional and Related Matters............................ 55 SECTION 19. Limitation on Recourse........................................ 56 SECTION 20. Notices....................................................... 56 SECTION 21. Expenses...................................................... 56 SECTION 22. Reliance of Liquidity Provider................................ 58 SECTION 23. Miscellaneous................................................. 58 SECTION 24. Governing Law................................................. 59 SECTION 25. Effectiveness................................................. 59 Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1990 AWA-13] REFUNDING AGREEMENT [GPA 1990 AWA-13] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) [______________ ________________], a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the five separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Sanwa International PLC, as Lender (and predecessor in interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, as amended by the Letter Agreement dated as of July 29, 1993 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one Airbus A320-231 aircraft (the "Aircraft"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the 5 Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 to Trust Indenture and Security Agreement dated March 27, 1992, and as further amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29, 1993 (as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued loan certificates substantially in the form set forth in Section 2.02 thereof (the "Original Certificates") to the Lenders as evidence of the indebtedness then being made by the Owner Trustee to finance a portion of the purchase price of the Aircraft; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, as supplemented by Lease Supplement [GPA 1990 AWA-13] No. 1 dated September 28, 1990, and as further supplemented by Lease Supplement No. 2 dated as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1990 AWA-13] dated as of September 21, 1990 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-13] No. 1 dated September 28, 1990 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-13], dated as of - 2 - 6 September 21, 1990 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-13] dated September 28, 1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990 AWA-13] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1990 AWA-13] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of the Original Head Lessee under Section 21(f) of the Sublease; WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1990 AWA-13], dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease [GPA 1990 AWA-13] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 2 dated the Restatement Date (the "First Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in five series, the proceeds from the - 3 - 7 issuance and sale of which will be applied in part to the prepayment in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the Original Lease as the Amended and Restated Lease (as so amended and restated, the "Lease"); WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1990 AWA-13] No. 2 ("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the Head Lease TIA (as so amended and restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, five separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving - 4 - 8 credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus an amount (the "Prepayment Amount") equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.12 of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to the aggregate principal amount of the Original Certificates outstanding on the Restatement Date, together with accrued and unpaid - 5 - 9 interest on the Original Certificates up to but not including the Restatement Date plus the Prepayment Amount; (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of principal, interest, Break Funding Cost, if any, described in clause (iii) above, owing to them on the Restatement Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 2); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 2; (ix) the Original Head Lessee and the Owner Participant shall enter into the Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" aircraft to the Lessee and the obligation of the Lessee to accept and lease such aircraft (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate - 6 - 10 principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in - 7 - 11 Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) Trust Supplement No. 2; (4) the First Amended and Restated Indenture and Trust Indenture Supplement No. 2; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: - 8 - 12 (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (1), (5) and (6) below, a certificate signed by an authorized officer of the Lessee and, in the case of (2), (3) and (4) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness and has a current, valid certificate of airworthiness; (2) the Aircraft FAA Bill of Sale (as defined in the Participation Agreement), the Original Lease - 9 - 13 (excluding Lease Supplement No. 2) and the Original Indenture have each been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (3) Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering the Aircraft shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; (4) the Aircraft has been registered with the FAA in the name of the Owner Trustee; (5) the Lessee has authority to operate the Aircraft; and (6) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; - 10 - 14 (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). - 11 - 15 (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable authority designated by the board of directors thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized representative of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. - 12 - 16 (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Hunton & Williams, special counsel for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. - 13 - 17 (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Original Head Lessee, the Lessee, GPA Leasing USA I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the - 14 - 18 case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the Lease. (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Amended and Restated Lease (including Lease Supplement No. 3) and the First Amended and Restated Indenture (including Trust Indenture Supplement No. 2) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: - 15 - 19 (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; - 16 - 20 (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; - 17 - 21 (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass - 18 - 22 Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the Original Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the First Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the First Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the First Amended and Restated Indenture. The First Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the Original Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the Original Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect from and including the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no - 19 - 23 obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, - 20 - 24 or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect, (B) the registration of the Aircraft pursuant to the Federal Aviation Act and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in - 21 - 25 the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any - 22 - 26 other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain - 23 - 27 any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings or the non-payment of such Taxes do not involve any material danger to the sale, forfeiture or loss of the Aircraft; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Aircraft under - 24 - 28 the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Aircraft. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a banking association duly organized, validly existing and in good standing under the federal laws of the United States of America, is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (as so defined, a "Citizen of the United States") (without making use of a voting trust, voting powers agreement or similar arrangement), will notify promptly all parties to this Agreement if in its reasonable opinion its status as a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement) is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Indenture promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement), and has the full corporate power, authority and legal right under the laws of the State of Connecticut and the federal laws of the United States pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party; (2) neither the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and - 25 - 29 provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation or any judgment or order applicable to or binding on it of any United States governmental authority or agency governing the trust powers of the Indenture Trustee; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any State of Connecticut or any United States of America governmental authority or agency regulating the trust powers of the Indenture Trustee is required for the execution and delivery of, or the carrying out by, the Indenture Trustee of any of the transactions contemplated hereby or by the Indenture, Lease - 26 - 30 Amendment No. 1 or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (6) there are no Lenders' Liens (as defined in the Lease) on the Aircraft or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (7) it has possession of the chattel paper original counterpart of the Original Lease, Lease Amendment No. 1 and the Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 2, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of - 27 - 31 creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 2, the Original Indenture, the Indenture, the Original Lease, Lease Amendment No. 1, the Lease, the Equipment Notes, or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel - 28 - 32 mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States of America governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of Delaware or any political subdivision thereof in connection with the prepayment of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual - 29 - 33 capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; (10) both its chief executive office, and the place where its records concerning the Aircraft and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto; and (11) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust Supplement No. 2 have been duly authorized, executed and delivered by it; and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement, the Trust Agreement, the SLV Letter - 30 - 34 Agreement and the Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than the laws, rules or regulations relating to aircraft lease transactions generally or to the - 31 - 35 citizenship requirements of the Owner Participant under the Federal Aviation Act); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Amended and Restated Head Lease TIA; (5) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens); and (6) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). If at any time Owner Participant has ceased to be, or shall have actual knowledge that it is likely to cease to be, such a citizen, and (i) the Aircraft shall be or would thereupon become ineligible for registration in the name of Owner Trustee under the Federal Aviation Act as in effect at such time (without regard to the "based and primarily used" provisions thereof) and the regulations then applicable thereunder, or (ii) the Aircraft is registered in a jurisdiction other than the United States of America, in circumstances in which the preceding clause (i) does not apply and the Lessee or any Permitted Sublessee at any time proposes to register the Aircraft in the United States of America, then Owner Participant shall (at its own expense and without any reimbursement or indemnification from the Lessee or any Permitted Sublessee) (A) immediately either (1) transfer in accordance with Section 10 hereof all of its right, title and interest in and to the Trust Agreement, the Trust Estate, this Agreement and the Amended and Restated Head Lease TIA or (2) take such other action, including, without limitation, the establishment of a voting trust or voting powers agreement (in which case Owner Participant shall remain the beneficial owner of the Trust Estate), as may be necessary to prevent the deregistration of the Aircraft under the Federal Aviation Act or to maintain such registration of the Aircraft or to make possible such registration of the Aircraft in the United States of - 32 - 36 America and to prevent Indenture Trustee, the Holders of the Equipment Notes, the Lessee or any Permitted Sublessee from being adversely affected as a result thereof and (B) indemnify the Lessee, the Indenture Trustee, the Holders of the Equipment Notes and any Permitted Sublessee, from and against any and all Claims incurred or suffered as a result of Owner Participant's failure to be such a citizen or loss of such citizenship, including, without limitation, as a result of the Aircraft's becoming ineligible or ceasing to remain eligible for such registration. (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any - 33 - 37 law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of - 34 - 38 the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. - 35 - 39 (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, - 36 - 40 the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent - 37 - 41 authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default - 38 - 42 would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Aircraft free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Aircraft, and Permitted Liens under the Original Lease; (7) title to the Buyer Furnished Equipment for the Aircraft has been transferred to the Owner Trustee in accordance with Section 8(y) of the Participation Agreement. As of the Restatement Date, there are no existing Claims against Parent Guarantor or Original Head Lessee with respect to Buyer Furnished Equipment; and (8) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with - 39 - 43 confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, - 40 - 44 except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty with - 41 - 45 respect to Section 9(f)(8) shall be only for the benefit of the Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by operation of law, consolidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom or permit the transfer of any of its stock in any transaction which has the practical effect of any of the foregoing; provided that, and subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions, and Owner Participant agrees for the express benefit of each party hereto that any such transfer will comply with such conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank, trust company or other like regulated financial institution with a combined capital, surplus and undivided profits of, or a corporation with a tangible net worth of, in either case at least $60,000,000, (B) any wholly-owned subsidiary of such bank, trust company, financial institution or corporation if such bank, trust company, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; - 42 - 46 (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and does not violate clause (viii) below; provided that if such Transferee is a subsidiary of Owner Participant, such notice may be given promptly following rather than prior to such transfer if such Transferee meets the net worth requirement set forth above on its own account without a guaranty and otherwise meets the requirements of this Section 10; (iii) upon giving effect to such transfer, such Transferee is a Citizen of the United States and such Transferee shall deliver to Lessee an affidavit to such effect; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not violate any provision of ERISA or any rules or regulations thereunder; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, any Person engaged in the business of parcel transport by air or a subsidiary or an Affiliate of such an airline, a commercial air carrier, an air freight forwarder, Person engaged in the business of parcel transport by air or other similar Person; - 43 - 47 (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Aircraft previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Amended and Restated Head Lease TIA by or against Owner Participant which have accrued or been made prior to the date of such transfer. The transferor Owner Participant shall pay the reasonable expenses of each party hereto related to any such transfer. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. The Lessee shall have no obligation to prevent any such deregistration or assist in maintaining or otherwise enhancing the Aircraft's - 44 - 48 eligibility for registration by restricting the use of the Aircraft. SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee agrees, that if the Owner Participant consents thereto, which consent shall not be unreasonably withheld, at any time after the Restricted Use Period, Lessee may, in connection with effecting a Permitted Sublease elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit C hereto (or such other country as the Owner Participant approves) and (b) the following conditions are met: (i) unless the country of registry is Taiwan, the United States of America maintains normal diplomatic relations with the country of registry of the Aircraft, and if the country of registry is Taiwan, the United States of America maintains diplomatic relations at least as good as those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner Participant and the Indenture Trustee shall have received favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably acceptable to the Owner Participant to the effect of the following and as to such other matters as the Owner Participant may reasonably request: (A) the Owner Trustee's ownership interest in the Aircraft and interest in the Lease and any Permitted Sublease shall be recognized under the laws of such jurisdiction, (B) the obligations of Lessee, and the rights and remedies of the Owner Trustee, under the Lease shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such jurisdiction (or the laws of the jurisdiction to which the laws of such jurisdiction would refer as the applicable governing law), (C) after giving effect to such change in registration, the Lien of the Indenture on the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and any Permitted Sublease shall continue as a valid and duly perfected security interest and all filing, recording or other action necessary to protect the same and the Owner Trustee's ownership interest in the Aircraft shall have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording or other action is necessary and (2) the Owner Trustee and the Indenture - 45 - 49 Trustee shall have received a certificate from Lessee that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be delivered to the Owner Trustee and the Indenture Trustee on or prior to the effective date of such change in registration), (D) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Owner Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate thereof), as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), (F) (unless Lessee shall have agreed, or pursuant to the Lease shall have been required, to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (i) the insurance required by Section 12 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and the Owner Trustee and the Indenture Trustee shall have received a certificate of the type described in Section 12(f) of the Lease and (ii) the aircraft maintenance standards of the new country of registry shall not be materially less stringent from those of the United States of America or not materially less stringent from those of the United Kingdom and the Owner Trustee and the Indenture Trustee shall have received a certificate to such effect signed by the President, any Executive Vice President or any Senior Vice President of Lessee which certificate shall, as among the parties hereto, be presumed to be correct as to the matters stated therein absent conclusive evidence to the contrary. Lessee shall pay all reasonable costs, - 46 - 50 expenses, fees, and recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person lawfully claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. - 47 - 51 Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of the - 48 - 52 Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien (including, without limitation, Claims against Lessor and Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement except in accordance with the terms thereof, provided that any such amendment, supplement or modification shall not adversely affect the Lessee, and (iii) not to terminate or revoke the Trust Agreement except in accordance with the terms thereof, provided that any such termination or revocation shall not adversely affect the Lessee. (b) Notwithstanding anything to the contrary in the Trust Agreement or Section 14(a) hereof, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall - 49 - 53 not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30 days' prior notice thereof and (B) if, within 15 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made, and (D) such change does not affect the registration of the Aircraft. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or - 50 - 54 the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and the exclusions in the Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis (subject to the exclusions set forth in Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and against any increase in Taxes borne by such Person that results from such change in situs. In no event shall any change in situs of the trust affect Original Head Lessee's rights or obligations under the Amended and Restated Head Lease TIA. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that - 51 - 55 Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay expenses on an after tax basis relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was solely at the request of the Owner Participant. (e) The Trust Company agrees that if at any time it shall obtain actual knowledge that it has ceased to be or will likely cease to be a Citizen of the United States, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under such Federal Aviation Act or any other law to permit the continued registration of the Aircraft in the name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship would have any material adverse effect on any holder of Equipment Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of the successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement. SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the - 52 - 56 termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all obligations and liabilities under the Sublease Guaranty, other than in respect of the obligations and liabilities of the Original Head Lessee in respect of Sublessor's Liens as provided above. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor, shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent - 53 - 57 Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to (but excluding) the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. - 54 - 58 SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, - 55 - 59 addressed to it at _____________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford, Connecticut 06115 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of- - 56 - 60 pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, the Subordination Agent and the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Hunton & Williams, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. - 57 - 61 SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Aircraft from the lien of the Indenture and the termination of the Indenture pursuant to - 58 - 62 and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 59 - 63 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:_______________________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA SUB I, INC. By:_______________________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:_______________________________________ Name: Title: Address: GPA House Shannon, County Clare, Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 60 - 64 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_______________________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [_______________________________] By:_______________________________________ Name: Title: Address: Telephone: Telecopier: Attention: FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 61 - 65 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 62 - 66 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. 67 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price - ------------ ----------- ----------- -------- ----------- Class A $11,897,518 02-Jan-2009 6.85% $11,897,518 Class B $ 4,413,774 02-Jul-2005 6.93% $ 4,413,774 Class C $ 4,552,621 02-Jan-2002 6.86% $ 4,552,621 Class D $ 4,249,113 02-Jan-2002 8.16% $ 4,249,113 Class E $ 2,541,597 02-Jul-2002 10.50% $ 2,541,597
68 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 69 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-13] TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-13], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, [______________________], a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1990 AWA-13], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 70 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or - 2 - 71 right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, - 3 - 72 Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and - 4 - 73 remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required. 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - 5 - 74 (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; [(g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for - 6 - 75 taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and](1) (h) the Guarantor is [type of legal personality] with a [combined capital, surplus and undivided profits] [tangible net worth] of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to - -------- (1) This representation is not applicable if Transferee is a wholly-owned subsidiary of the Owner Participant. - 7 - 76 affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 77 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 78 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-13] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-13] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, [_______________________________], Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 79 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and - 2 - 80 compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it without a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) on the date hereof it is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a [combined capital, surplus and undivided profits] [tangible net worth] of not less than $60,000,000. - 3 - 81 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:___________________________________ Title: [ASSIGNEE] By:___________________________________ Title: - 4 - 82 EXHIBIT C to REFUNDING AGREEMENT LIST OF COUNTRIES Australia Canada Denmark Finland France Germany Iceland Ireland Japan Luxembourg Netherlands New Zealand Norway Singapore South Korea Sweden Switzerland United Kingdom 83 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 84 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) Trust Agreement Supplement [GPA 1990 AWA-13] No. 2 dated November 26, 1996 (the "Trust Agreement Supplement") between the Owner Trustee and the Owner Participant, amending the Trust Agreement, which Trust Agreement Supplement was filed with the FAA at 12:20 p.m., C.S.T. on November 26, 1996; (b) First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1990 AWA-13] dated November 26, 1996 (the "Indenture Supplement"), with respect to the Aircraft, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (c) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as successor lessee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (d) Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of September 21, 1990 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease, with Lease Supplement [GPA 1990 AWA-13] No. 3 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Aircraft, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. Trust Agreement Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990 between [__________________________], formerly 85 [________________________], as owner participant, and Wilmington Trust Company, as owner trustee, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-13] No. 1 dated September 28, 1990. Original Indenture Trust Indenture and Security Agreement [GPA 1990 AWA- 13] dated as of September 21, 1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), as indenture trustee, which was recorded by the Federal Aviation Administration on October 1, 1990 and assigned Conveyance No. E10187, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- ------------------------------------------ Trust Indenture Supplement No. 1 09/28/90 10/01/90 E10187 Amendment No. 1 to Trust Indenture and Security Agreement [GPA 1990 AWA-13] 03/27/92 05/18/92 EE003014 Amendment No. 2 to Trust Indenture and Security Agreement as of [GPA 1990 AWA-13] 07/29/93 08/04/93 F59673
- 2 - 86 Original Head Lease Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of September 21, 1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as lessor, and GPA Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation Administration on October 1, 1990 and assigned Conveyance No. E10188, as supplemented by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- ------------------------------------------ Lease Supplement [GPA 1990 AWA-13] No. 1 09/28/90 10/01/90 E10188 Lease Supplement [GPA 1990 AWA-13] No. 2 12/31/91 (which was not filed for recordation with the FAA)
Sublease Aircraft Sublease Agreement [GPA 1990 AWA-13] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on October 1, 1990 and assigned Conveyance No. E10189, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- ------------------------------------------ Sublease Supplement No. 1 09/28/90 10/01/90 E10189 Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990 as of AWA-13] 08/26/91 09/11/91 261228
Sublease Collateral Assignment Assignment of Sublease [GPA 1990 AWA-13] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as assignee, which was attached to and recorded as one instrument with the Sublease on October 1, 1990 and assigned Conveyance No. E10189. - 3 - EX-4.16 17 FORM OF REFUNDING AGREEMENT [GPA 1990 AWA-14] 1 Exhibit 4.16 - -------------------------------------------------------------------------------- REFUNDING AGREEMENT [GPA 1990 AWA-14] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA SUB I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements ----------------------------, as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 092 Registration No. N635AW Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS PAGE SECTION 1. Purchase of Equipment Notes; Refunding.......................... 5 SECTION 2. Equipment Notes................................................. 7 SECTION 3. Conditions Precedent............................................ 7 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee.............................................. 15 SECTION 5. Amendment and Restatement of the Original Indenture................................... 19 SECTION 6. Amendment and Restatement of the Original Lease....................................... 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc.................................................. 19 SECTION 8. Representations and Warranties of the Lessee............................................... 20 SECTION 9. Representations and Warranties.................................. 25 SECTION 10. Transfer of Owner Participant's Interest............................................. 42 SECTION 11. Re-Registration of the Aircraft................................. 45 SECTION 12. Quiet Enjoyment................................................. 47 SECTION 13. Liens ..................................................... 47 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant................................ 49 SECTION 15. Certain Retained Rights and Releases............................ 52 - i - 3 PAGE SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee................ 54 SECTION 17. Lessee Protection of Title...................................... 55 SECTION 18. Jurisdictional and Related Matters.............................. 55 SECTION 19. Limitation on Recourse.......................................... 56 SECTION 20. Notices ........................................................ 56 SECTION 21. Expenses ....................................................... 56 SECTION 22. Reliance of Liquidity Provider.................................. 58 SECTION 23. Miscellaneous................................................... 58 SECTION 24. Governing Law................................................... 59 SECTION 25. Effectiveness................................................... 59 Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1990 AWA-14] REFUNDING AGREEMENT [GPA 1990 AWA-14] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) ________________________, a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the five separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Sanwa International PLC, as Lender (and predecessor in interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, as amended by the Letter Agreement dated as of July 29, 1993 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one Airbus A320-231 aircraft (the "Aircraft"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the 5 Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 to Trust Indenture and Security Agreement dated March 27, 1992, and as further amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29, 1993 (as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued loan certificates substantially in the form set forth in Section 2.02 thereof (the "Original Certificates") to the Lenders as evidence of the indebtedness then being made by the Owner Trustee to finance a portion of the purchase price of the Aircraft; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, as supplemented by Lease Supplement [GPA 1990 AWA-14] No. 1 dated September 28, 1990, and as further supplemented by Lease Supplement No. 2 dated as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1990 AWA-14] dated as of September 21, 1990 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-14] No. 1 dated September 28, 1990 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-14], dated as of - 2 - 6 September 21, 1990 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-14] dated September 28, 1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990 AWA-14] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1990 AWA-14] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of the Original Head Lessee under Section 21(f) of the Sublease; WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1990 AWA-14], dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease [GPA 1990 AWA-14] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-14], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 2 dated the Restatement Date (the "First Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in five series, the proceeds from the - 3 - 7 issuance and sale of which will be applied in part to the prepayment in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the Original Lease as the Amended and Restated Lease (as so amended and restated, the "Lease"); WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1990 AWA-14] No. 2 ("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the Head Lease TIA (as so amended and restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, five separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving - 4 - 8 credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus an amount (the "Prepayment Amount") equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.12 of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to the aggregate principal amount of the Original Certificates outstanding on the Restatement Date, together with accrued and unpaid - 5 - 9 interest on the Original Certificates up to but not including the Restatement Date plus the Prepayment Amount; (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of principal, interest, Break Funding Cost, if any, described in clause (iii) above, owing to them on the Restatement Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 2); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 2; (ix) the Original Head Lessee and the Owner Participant shall enter into the Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" aircraft to the Lessee and the obligation of the Lessee to accept and lease such aircraft (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate - 6 - 10 principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in - 7 - 11 Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) Trust Supplement No. 2; (4) the First Amended and Restated Indenture and Trust Indenture Supplement No. 2; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: - 8 - 12 (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (1), (5) and (6) below, a certificate signed by an authorized officer of the Lessee and, in the case of (2), (3) and (4) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness and has a current, valid certificate of airworthiness; (2) the Aircraft FAA Bill of Sale (as defined in the Participation Agreement), the Original Lease - 9 - 13 (excluding Lease Supplement No. 2) and the Original Indenture have each been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (3) Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering the Aircraft shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; (4) the Aircraft has been registered with the FAA in the name of the Owner Trustee; (5) the Lessee has authority to operate the Aircraft; and (6) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; - 10 - 14 (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by- laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). - 11 - 15 (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable authority designated by the board of directors thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized representative of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. - 12 - 16 (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Hunton & Williams, special counsel for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. - 13 - 17 (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Original Head Lessee, the Lessee, GPA Leasing USA I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the - 14 - 18 case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the Lease. (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Amended and Restated Lease (including Lease Supplement No. 3) and the First Amended and Restated Indenture (including Trust Indenture Supplement No. 2) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: - 15 - 19 (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; - 16 - 20 (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; - 17 - 21 (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass - 18 - 22 Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the Original Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the First Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the First Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the First Amended and Restated Indenture. The First Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the Original Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the Original Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect from and including the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no - 19 - 23 obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, - 20 - 24 or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect, (B) the registration of the Aircraft pursuant to the Federal Aviation Act and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in - 21 - 25 the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any - 22 - 26 other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain - 23 - 27 any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings or the non-payment of such Taxes do not involve any material danger to the sale, forfeiture or loss of the Aircraft; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Aircraft under - 24 - 28 the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Aircraft. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a banking association duly organized, validly existing and in good standing under the federal laws of the United States of America, is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (as so defined, a "Citizen of the United States") (without making use of a voting trust, voting powers agreement or similar arrangement), will notify promptly all parties to this Agreement if in its reasonable opinion its status as a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement) is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Indenture promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement), and has the full corporate power, authority and legal right under the laws of the State of Connecticut and the federal laws of the United States pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party; (2) neither the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and - 25 - 29 provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation or any judgment or order applicable to or binding on it of any United States governmental authority or agency governing the trust powers of the Indenture Trustee; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any State of Connecticut or any United States of America governmental authority or agency regulating the trust powers of the Indenture Trustee is required for the execution and delivery of, or the carrying out by, the Indenture Trustee of any of the transactions contemplated hereby or by the Indenture, Lease - 26 - 30 Amendment No. 1 or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (6) there are no Lenders' Liens (as defined in the Lease) on the Aircraft or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (7) it has possession of the chattel paper original counterpart of the Original Lease, Lease Amendment No. 1 and the Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 2, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of - 27 - 31 creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 2, the Original Indenture, the Indenture, the Original Lease, Lease Amendment No. 1, the Lease, the Equipment Notes, or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel - 28 - 32 mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States of America governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of Delaware or any political subdivision thereof in connection with the prepayment of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual - 29 - 33 capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; (10) both its chief executive office, and the place where its records concerning the Aircraft and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto; and (11) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust Supplement No. 2 have been duly authorized, executed and delivered by it; and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement, the Trust Agreement, the SLV Letter - 30 - 34 Agreement and the Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than the laws, rules or regulations relating to aircraft lease transactions generally or to the - 31 - 35 citizenship requirements of the Owner Participant under the Federal Aviation Act); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Amended and Restated Head Lease TIA; (5) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens); and (6) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). If at any time Owner Participant has ceased to be, or shall have actual knowledge that it is likely to cease to be, such a citizen, and (i) the Aircraft shall be or would thereupon become ineligible for registration in the name of Owner Trustee under the Federal Aviation Act as in effect at such time (without regard to the "based and primarily used" provisions thereof) and the regulations then applicable thereunder, or (ii) the Aircraft is registered in a jurisdiction other than the United States of America, in circumstances in which the preceding clause (i) does not apply and the Lessee or any Permitted Sublessee at any time proposes to register the Aircraft in the United States of America, then Owner Participant shall (at its own expense and without any reimbursement or indemnification from the Lessee or any Permitted Sublessee) (A) immediately either (1) transfer in accordance with Section 10 hereof all of its right, title and interest in and to the Trust Agreement, the Trust Estate, this Agreement and the Amended and Restated Head Lease TIA or (2) take such other action, including, without limitation, the establishment of a voting trust or voting powers agreement (in which case Owner Participant shall remain the beneficial owner of the Trust Estate), as may be necessary to prevent the deregistration of the Aircraft under the Federal Aviation Act or to maintain such registration of the Aircraft or to make possible such registration of the Aircraft in the United States of - 32 - 36 America and to prevent Indenture Trustee, the Holders of the Equipment Notes, the Lessee or any Permitted Sublessee from being adversely affected as a result thereof and (B) indemnify the Lessee, the Indenture Trustee, the Holders of the Equipment Notes and any Permitted Sublessee, from and against any and all Claims incurred or suffered as a result of Owner Participant's failure to be such a citizen or loss of such citizenship, including, without limitation, as a result of the Aircraft's becoming ineligible or ceasing to remain eligible for such registration. (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any - 33 - 37 law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of - 34 - 38 the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. - 35 - 39 (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, - 36 - 40 the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent - 37 - 41 authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default - 38 - 42 would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Aircraft free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Aircraft, and Permitted Liens under the Original Lease; (7) title to the Buyer Furnished Equipment for the Aircraft has been transferred to the Owner Trustee in accordance with Section 8(y) of the Participation Agreement. As of the Restatement Date, there are no existing Claims against Parent Guarantor or Original Head Lessee with respect to Buyer Furnished Equipment; and (8) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with - 39 - 43 confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, - 40 - 44 except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty with - 41 - 45 respect to Section 9(f)(8) shall be only for the benefit of the Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by operation of law, consolidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom or permit the transfer of any of its stock in any transaction which has the practical effect of any of the foregoing; provided that, and subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions, and Owner Participant agrees for the express benefit of each party hereto that any such transfer will comply with such conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank, trust company or other like regulated financial institution with a combined capital, surplus and undivided profits of, or a corporation with a tangible net worth of, in either case at least $60,000,000, (B) any wholly-owned subsidiary of such bank, trust company, financial institution or corporation if such bank, trust company, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; - 42 - 46 (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and does not violate clause (viii) below; provided that if such Transferee is a subsidiary of Owner Participant, such notice may be given promptly following rather than prior to such transfer if such Transferee meets the net worth requirement set forth above on its own account without a guaranty and otherwise meets the requirements of this Section 10; (iii) upon giving effect to such transfer, such Transferee is a Citizen of the United States and such Transferee shall deliver to Lessee an affidavit to such effect; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not violate any provision of ERISA or any rules or regulations thereunder; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, any Person engaged in the business of parcel transport by air or a subsidiary or an Affiliate of such an airline, a commercial air carrier, an air freight forwarder, Person engaged in the business of parcel transport by air or other similar Person; - 43 - 47 (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Aircraft previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Amended and Restated Head Lease TIA by or against Owner Participant which have accrued or been made prior to the date of such transfer. The transferor Owner Participant shall pay the reasonable expenses of each party hereto related to any such transfer. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. The Lessee shall have no obligation to prevent any such deregistration or assist in maintaining or otherwise enhancing the Aircraft's - 44 - 48 eligibility for registration by restricting the use of the Aircraft. SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee agrees, that if the Owner Participant consents thereto, which consent shall not be unreasonably withheld, at any time after the Restricted Use Period, Lessee may, in connection with effecting a Permitted Sublease elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit C hereto (or such other country as the Owner Participant approves) and (b) the following conditions are met: (i) unless the country of registry is Taiwan, the United States of America maintains normal diplomatic relations with the country of registry of the Aircraft, and if the country of registry is Taiwan, the United States of America maintains diplomatic relations at least as good as those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner Participant and the Indenture Trustee shall have received favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably acceptable to the Owner Participant to the effect of the following and as to such other matters as the Owner Participant may reasonably request: (A) the Owner Trustee's ownership interest in the Aircraft and interest in the Lease and any Permitted Sublease shall be recognized under the laws of such jurisdiction, (B) the obligations of Lessee, and the rights and remedies of the Owner Trustee, under the Lease shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such jurisdiction (or the laws of the jurisdiction to which the laws of such jurisdiction would refer as the applicable governing law), (C) after giving effect to such change in registration, the Lien of the Indenture on the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and any Permitted Sublease shall continue as a valid and duly perfected security interest and all filing, recording or other action necessary to protect the same and the Owner Trustee's ownership interest in the Aircraft shall have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording or other action is necessary and (2) the Owner Trustee and the Indenture - 45 - 49 Trustee shall have received a certificate from Lessee that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be delivered to the Owner Trustee and the Indenture Trustee on or prior to the effective date of such change in registration), (D) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Owner Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate thereof), as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), (F) (unless Lessee shall have agreed, or pursuant to the Lease shall have been required, to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (i) the insurance required by Section 12 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and the Owner Trustee and the Indenture Trustee shall have received a certificate of the type described in Section 12(f) of the Lease and (ii) the aircraft maintenance standards of the new country of registry shall not be materially less stringent from those of the United States of America or not materially less stringent from those of the United Kingdom and the Owner Trustee and the Indenture Trustee shall have received a certificate to such effect signed by the President, any Executive Vice President or any Senior Vice President of Lessee which certificate shall, as among the parties hereto, be presumed to be correct as to the matters stated therein absent conclusive evidence to the contrary. Lessee shall pay all reasonable costs, - 46 - 50 expenses, fees, and recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person lawfully claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. - 47 - 51 Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of the - 48 - 52 Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien (including, without limitation, Claims against Lessor and Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement except in accordance with the terms thereof, provided that any such amendment, supplement or modification shall not adversely affect the Lessee, and (iii) not to terminate or revoke the Trust Agreement except in accordance with the terms thereof, provided that any such termination or revocation shall not adversely affect the Lessee. (b) Notwithstanding anything to the contrary in the Trust Agreement or Section 14(a) hereof, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall - 49 - 53 not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30 days' prior notice thereof and (B) if, within 15 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made, and (D) such change does not affect the registration of the Aircraft. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or - 50 - 54 the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and the exclusions in the Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis (subject to the exclusions set forth in Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and against any increase in Taxes borne by such Person that results from such change in situs. In no event shall any change in situs of the trust affect Original Head Lessee's rights or obligations under the Amended and Restated Head Lease TIA. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that - 51 - 55 Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay expenses on an after tax basis relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was solely at the request of the Owner Participant. (e) The Trust Company agrees that if at any time it shall obtain actual knowledge that it has ceased to be or will likely cease to be a Citizen of the United States, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under such Federal Aviation Act or any other law to permit the continued registration of the Aircraft in the name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship would have any material adverse effect on any holder of Equipment Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of the successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement. SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the - 52 - 56 termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all obligations and liabilities under the Sublease Guaranty, other than in respect of the obligations and liabilities of the Original Head Lessee in respect of Sublessor's Liens as provided above. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor, shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent - 53 - 57 Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to (but excluding) the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. - 54 - 58 SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, - 55 - 59 addressed to it at ________________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford, Connecticut 06115 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of- - 56 - 60 pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, the Subordination Agent and the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Hunton & Williams, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. - 57 - 61 SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Aircraft from the lien of the Indenture and the termination of the Indenture pursuant to - 58 - 62 and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 59 - 63 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:_______________________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA SUB I, INC. By:_______________________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:_______________________________________ Name: Title: Address: GPA House Shannon, County Clare, Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 60 - 64 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_______________________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [_________________________________________] By:_______________________________________ Name: Title: Address: Telephone: Telecopier: Attention: FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 61 - 65 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 62 - 66 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. 67 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price - ------------ --------- -------- -------- -------- Class A $ 11,897,518 02-Jan-2009 6.85% $ 11,897,518 Class B $ 4,413,774 02-Jul-2005 6.93% $ 4,413,774 Class C $ 4,552,621 02-Jan-2002 6.86% $ 4,552,621 Class D $ 4,249,113 02-Jan-2002 8.16% $ 4,249,113 Class E $ 2,541,597 02-Jul-2002 10.50% $ 2,541,597
68 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 69 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-14] TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-14], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, ____________________________, a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1990 AWA-14], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 70 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or - 2 - 71 right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, - 3 - 72 Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and - 4 - 73 remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required. 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - 5 - 74 (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; [(g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for - 6 - 75 taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and] (1) (h) the Guarantor is [type of legal personality] with a [combined capital, surplus and undivided profits] [tangible net worth] of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to - -------- (1) This representation is not applicable if Transferee is a wholly-owned subsidiary of the Owner Participant. - 7 - 76 affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 77 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 78 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-14] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-14] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, _________________________, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 79 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and - 2 - 80 compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it without a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee repre- sents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) on the date hereof it is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a [combined capital, surplus and undivided profits] [tangible net worth] of not less than $60,000,000. - 3 - 81 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:_____________________________________ Title: [ASSIGNEE] By:_____________________________________ Title: - 4 - 82 EXHIBIT C to REFUNDING AGREEMENT LIST OF COUNTRIES Australia Canada Denmark Finland France Germany Iceland Ireland Japan Luxembourg Netherlands New Zealand Norway Singapore South Korea Sweden Switzerland United Kingdom 83 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 84 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) Trust Agreement Supplement [GPA 1990 AWA-14] No. 2 dated November 26, 1996 (the "Trust Agreement Supplement") between the Owner Trustee and the Owner Participant, amending the Trust Agreement, which Trust Agreement Supplement was filed with the FAA at 12:20 p.m., C.S.T. on November 26, 1996; (b) First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-14] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1990 AWA-14] dated November 26, 1996 (the "Indenture Supplement"), with respect to the Aircraft, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (c) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as successor lessee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (d) Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of September 21, 1990 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease, with Lease Supplement [GPA 1990 AWA-14] No. 3 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Aircraft, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. Trust Agreement Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990 between ________________________, as owner participant, 85 and Wilmington Trust Company, as owner trustee, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-14] No. 1 dated September 28, 1990. Original Indenture Trust Indenture and Security Agreement [GPA 1990 AWA- 14] dated as of September 21, 1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), as indenture trustee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. E10184, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Trust Indenture Supplement No. 1 09/28/90 09/28/90 E10184 Amendment No. 1 to Trust Indenture and Security Agreement [GPA 1990 AWA-14] 03/27/92 05/18/92 EE003011 Amendment No. 2 to Trust Indenture and Security Agreement as of [GPA 1990 AWA-14] 07/29/93 08/04/93 F59674
Original Head Lease Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of September 21, 1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as lessor, and GPA Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. E10185, as supplemented by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Lease Supplement (GPA 1990 AWA-14] No. 1 09/28/90 09/28/90 E10185 Lease Supplement [GPA 1990 AWA-14] No. 2 12/31/91 (which was not filed for recordation with the FAA)
- 2 - 86 Sublease Aircraft Sublease Agreement (GPA 1990 AWA-14] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. E10186, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Sublease Supplement No. 1 09/28/90 09/28/90 E10186 Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990 as of AWA-14] 08/26/91 09/11/91 DD001626
Sublease Collateral Assignment Assignment of Sublease [GPA 1990 AWA-14] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as assignee, which was attached to and recorded as one instrument with the Sublease on September 28, 1990 and assigned Conveyance No. E10186. - 3 - EX-4.17 18 FORM OF REFUNDING AGREEMENT [GPA 1989 AWA-15] 1 Exhibit 4.17 - -------------------------------------------------------------------------------- REFUNDING AGREEMENT [GPA 1990 AWA-15] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA SUB I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements ---------------------------------, as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 098 Registration No. N636AW Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS PAGE ---- SECTION 1. Purchase of Equipment Notes; Refunding.............................................................. 5 SECTION 2. Equipment Notes..................................................................................... 7 SECTION 3. Conditions Precedent................................................................................ 7 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee.................................................................................. 15 SECTION 5. Amendment and Restatement of the Original Indenture....................................................................... 19 SECTION 6. Amendment and Restatement of the Original Lease........................................................................... 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc...................................................................................... 19 SECTION 8. Representations and Warranties of the Lessee................................................................................... 20 SECTION 9. Representations and Warranties...................................................................... 25 SECTION 10. Transfer of Owner Participant's Interest................................................................................. 42 SECTION 11. Re-Registration of the Aircraft..................................................................... 45 SECTION 12. Quiet Enjoyment..................................................................................... 47 SECTION 13. Liens ......................................................................................... 47 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant.................................................................... 49 SECTION 15. Certain Retained Rights and Releases................................................................ 52
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PAGE SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee.................................................... 54 SECTION 17. Lessee Protection of Title.......................................................................... 55 SECTION 18. Jurisdictional and Related Matters.................................................................. 55 SECTION 19. Limitation on Recourse.............................................................................. 56 SECTION 20. Notices ......................................................................................... 56 SECTION 21. Expenses ......................................................................................... 56 SECTION 22. Reliance of Liquidity Provider...................................................................... 58 SECTION 23. Miscellaneous....................................................................................... 58 SECTION 24. Governing Law....................................................................................... 59 SECTION 25. Effectiveness....................................................................................... 59
Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1990 AWA-15] REFUNDING AGREEMENT [GPA 1990 AWA-15] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) _________________________, a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the five separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Sanwa International PLC, as Lender (and predecessor in interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, as amended by the Letter Agreement dated as of July 29, 1993 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one Airbus A320-231 aircraft (the "Aircraft"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the 5 Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 to Trust Indenture and Security Agreement dated March 27, 1992, and as further amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29, 1993 (as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued loan certificates substantially in the form set forth in Section 2.02 thereof (the "Original Certificates") to the Lenders as evidence of the indebtedness then being made by the Owner Trustee to finance a portion of the purchase price of the Aircraft; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, as supplemented by Lease Supplement [GPA 1990 AWA-15] No. 1 dated September 28, 1990, and as further supplemented by Lease Supplement No. 2 dated as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1990 AWA-15] dated as of September 21, 1990 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-15] No. 1 dated September 28, 1990 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-15], dated as of - 2 - 6 September 21, 1990 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-15] dated September 28, 1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990 AWA-15] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1990 AWA-15] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of the Original Head Lessee under Section 21(f) of the Sublease; WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1990 AWA-15], dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease [GPA 1990 AWA-15] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-15], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 2 dated the Restatement Date (the "First Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in five series, the proceeds from the - 3 - 7 issuance and sale of which will be applied in part to the prepayment in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the Original Lease as the Amended and Restated Lease (as so amended and restated, the "Lease"); WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1990 AWA-15] No. 2 ("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the Head Lease TIA (as so amended and restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, five separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving - 4 - 8 credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus an amount (the "Prepayment Amount") equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.12 of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to the aggregate principal amount of the Original Certificates outstanding on the Restatement Date, together with accrued and unpaid - 5 - 9 interest on the Original Certificates up to but not including the Restatement Date plus the Prepayment Amount; (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of principal, interest, Break Funding Cost, if any, described in clause (iii) above, owing to them on the Restatement Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 2); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 2; (ix) the Original Head Lessee and the Owner Participant shall enter into the Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" aircraft to the Lessee and the obligation of the Lessee to accept and lease such aircraft (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate - 6 - 10 principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in - 7 - 11 Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) Trust Supplement No. 2; (4) the First Amended and Restated Indenture and Trust Indenture Supplement No. 2; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: - 8 - 12 (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (1), (5) and (6) below, a certificate signed by an authorized officer of the Lessee and, in the case of (2), (3) and (4) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness and has a current, valid certificate of airworthiness; (2) the Aircraft FAA Bill of Sale (as defined in the Participation Agreement), the Original Lease - 9 - 13 (excluding Lease Supplement No. 2) and the Original Indenture have each been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (3) Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering the Aircraft shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; (4) the Aircraft has been registered with the FAA in the name of the Owner Trustee; (5) the Lessee has authority to operate the Aircraft; and (6) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; - 10 - 14 (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by- laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). - 11 - 15 (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable authority designated by the board of directors thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized representative of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. - 12 - 16 (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Hunton & Williams, special counsel for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. - 13 - 17 (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Original Head Lessee, the Lessee, GPA Leasing USA I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the - 14 - 18 case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the Lease. (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Amended and Restated Lease (including Lease Supplement No. 3) and the First Amended and Restated Indenture (including Trust Indenture Supplement No. 2) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: - 15 - 19 (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; - 16 - 20 (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; - 17 - 21 (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass - 18 - 22 Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the Original Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the First Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the First Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the First Amended and Restated Indenture. The First Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the Original Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the Original Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect from and including the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no - 19 - 23 obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, - 20 - 24 or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect, (B) the registration of the Aircraft pursuant to the Federal Aviation Act and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in - 21 - 25 the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any - 22 - 26 other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain - 23 - 27 any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings or the non-payment of such Taxes do not involve any material danger to the sale, forfeiture or loss of the Aircraft; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Aircraft under - 24 - 28 the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Aircraft. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a banking association duly organized, validly existing and in good standing under the federal laws of the United States of America, is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (as so defined, a "Citizen of the United States") (without making use of a voting trust, voting powers agreement or similar arrangement), will notify promptly all parties to this Agreement if in its reasonable opinion its status as a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement) is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Indenture promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement), and has the full corporate power, authority and legal right under the laws of the State of Connecticut and the federal laws of the United States pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party; (2) neither the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and - 25 - 29 provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation or any judgment or order applicable to or binding on it of any United States governmental authority or agency governing the trust powers of the Indenture Trustee; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any State of Connecticut or any United States of America governmental authority or agency regulating the trust powers of the Indenture Trustee is required for the execution and delivery of, or the carrying out by, the Indenture Trustee of any of the transactions contemplated hereby or by the Indenture, Lease - 26 - 30 Amendment No. 1 or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (6) there are no Lenders' Liens (as defined in the Lease) on the Aircraft or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (7) it has possession of the chattel paper original counterpart of the Original Lease, Lease Amendment No. 1 and the Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 2, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of - 27 - 31 creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 2, the Original Indenture, the Indenture, the Original Lease, Lease Amendment No. 1, the Lease, the Equipment Notes, or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel - 28 - 32 mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States of America governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of Delaware or any political subdivision thereof in connection with the prepayment of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual - 29 - 33 capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; (10) both its chief executive office, and the place where its records concerning the Aircraft and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto; and (11) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust Supplement No. 2 have been duly authorized, executed and delivered by it; and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement, the Trust Agreement, the SLV Letter - 30 - 34 Agreement and the Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than the laws, rules or regulations relating to aircraft lease transactions generally or to the - 31 - 35 citizenship requirements of the Owner Participant under the Federal Aviation Act); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Amended and Restated Head Lease TIA; (5) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens); and (6) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). If at any time Owner Participant has ceased to be, or shall have actual knowledge that it is likely to cease to be, such a citizen, and (i) the Aircraft shall be or would thereupon become ineligible for registration in the name of Owner Trustee under the Federal Aviation Act as in effect at such time (without regard to the "based and primarily used" provisions thereof) and the regulations then applicable thereunder, or (ii) the Aircraft is registered in a jurisdiction other than the United States of America, in circumstances in which the preceding clause (i) does not apply and the Lessee or any Permitted Sublessee at any time proposes to register the Aircraft in the United States of America, then Owner Participant shall (at its own expense and without any reimbursement or indemnification from the Lessee or any Permitted Sublessee) (A) immediately either (1) transfer in accordance with Section 10 hereof all of its right, title and interest in and to the Trust Agreement, the Trust Estate, this Agreement and the Amended and Restated Head Lease TIA or (2) take such other action, including, without limitation, the establishment of a voting trust or voting powers agreement (in which case Owner Participant shall remain the beneficial owner of the Trust Estate), as may be necessary to prevent the deregistration of the Aircraft under the Federal Aviation Act or to maintain such registration of the Aircraft or to make possible such registration of the Aircraft in the United States of - 32 - 36 America and to prevent Indenture Trustee, the Holders of the Equipment Notes, the Lessee or any Permitted Sublessee from being adversely affected as a result thereof and (B) indemnify the Lessee, the Indenture Trustee, the Holders of the Equipment Notes and any Permitted Sublessee, from and against any and all Claims incurred or suffered as a result of Owner Participant's failure to be such a citizen or loss of such citizenship, including, without limitation, as a result of the Aircraft's becoming ineligible or ceasing to remain eligible for such registration. (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any - 33 - 37 law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of - 34 - 38 the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. - 35 - 39 (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, - 36 - 40 the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent - 37 - 41 authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default - 38 - 42 would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Aircraft free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Aircraft, and Permitted Liens under the Original Lease; (7) title to the Buyer Furnished Equipment for the Aircraft has been transferred to the Owner Trustee in accordance with Section 8(y) of the Participation Agreement. As of the Restatement Date, there are no existing Claims against Parent Guarantor or Original Head Lessee with respect to Buyer Furnished Equipment; and (8) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with - 39 - 43 confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, - 40 - 44 except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty with - 41 - 45 respect to Section 9(f)(8) shall be only for the benefit of the Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by operation of law, consolidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom or permit the transfer of any of its stock in any transaction which has the practical effect of any of the foregoing; provided that, and subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions, and Owner Participant agrees for the express benefit of each party hereto that any such transfer will comply with such conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank, trust company or other like regulated financial institution with a combined capital, surplus and undivided profits of, or a corporation with a tangible net worth of, in either case at least $60,000,000, (B) any wholly-owned subsidiary of such bank, trust company, financial institution or corporation if such bank, trust company, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; - 42 - 46 (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and does not violate clause (viii) below; provided that if such Transferee is a subsidiary of Owner Participant, such notice may be given promptly following rather than prior to such transfer if such Transferee meets the net worth requirement set forth above on its own account without a guaranty and otherwise meets the requirements of this Section 10; (iii) upon giving effect to such transfer, such Transferee is a Citizen of the United States and such Transferee shall deliver to Lessee an affidavit to such effect; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not violate any provision of ERISA or any rules or regulations thereunder; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, any Person engaged in the business of parcel transport by air or a subsidiary or an Affiliate of such an airline, a commercial air carrier, an air freight forwarder, Person engaged in the business of parcel transport by air or other similar Person; - 43 - 47 (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Aircraft previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Amended and Restated Head Lease TIA by or against Owner Participant which have accrued or been made prior to the date of such transfer. The transferor Owner Participant shall pay the reasonable expenses of each party hereto related to any such transfer. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. The Lessee shall have no obligation to prevent any such deregistration or assist in maintaining or otherwise enhancing the Aircraft's - 44 - 48 eligibility for registration by restricting the use of the Aircraft. SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee agrees, that if the Owner Participant consents thereto, which consent shall not be unreasonably withheld, at any time after the Restricted Use Period, Lessee may, in connection with effecting a Permitted Sublease elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit C hereto (or such other country as the Owner Participant approves) and (b) the following conditions are met: (i) unless the country of registry is Taiwan, the United States of America maintains normal diplomatic relations with the country of registry of the Aircraft, and if the country of registry is Taiwan, the United States of America maintains diplomatic relations at least as good as those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner Participant and the Indenture Trustee shall have received favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably acceptable to the Owner Participant to the effect of the following and as to such other matters as the Owner Participant may reasonably request: (A) the Owner Trustee's ownership interest in the Aircraft and interest in the Lease and any Permitted Sublease shall be recognized under the laws of such jurisdiction, (B) the obligations of Lessee, and the rights and remedies of the Owner Trustee, under the Lease shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such jurisdiction (or the laws of the jurisdiction to which the laws of such jurisdiction would refer as the applicable governing law), (C) after giving effect to such change in registration, the Lien of the Indenture on the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and any Permitted Sublease shall continue as a valid and duly perfected security interest and all filing, recording or other action necessary to protect the same and the Owner Trustee's ownership interest in the Aircraft shall have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording or other action is necessary and (2) the Owner Trustee and the Indenture - 45 - 49 Trustee shall have received a certificate from Lessee that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be delivered to the Owner Trustee and the Indenture Trustee on or prior to the effective date of such change in registration), (D) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Owner Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate thereof), as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), (F) (unless Lessee shall have agreed, or pursuant to the Lease shall have been required, to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (i) the insurance required by Section 12 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and the Owner Trustee and the Indenture Trustee shall have received a certificate of the type described in Section 12(f) of the Lease and (ii) the aircraft maintenance standards of the new country of registry shall not be materially less stringent from those of the United States of America or not materially less stringent from those of the United Kingdom and the Owner Trustee and the Indenture Trustee shall have received a certificate to such effect signed by the President, any Executive Vice President or any Senior Vice President of Lessee which certificate shall, as among the parties hereto, be presumed to be correct as to the matters stated therein absent conclusive evidence to the contrary. Lessee shall pay all reasonable costs, - 46 - 50 expenses, fees, and recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person lawfully claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. - 47 - 51 Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of the - 48 - 52 Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien (including, without limitation, Claims against Lessor and Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement except in accordance with the terms thereof, provided that any such amendment, supplement or modification shall not adversely affect the Lessee, and (iii) not to terminate or revoke the Trust Agreement except in accordance with the terms thereof, provided that any such termination or revocation shall not adversely affect the Lessee. (b) Notwithstanding anything to the contrary in the Trust Agreement or Section 14(a) hereof, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall - 49 - 53 not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30 days' prior notice thereof and (B) if, within 15 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made, and (D) such change does not affect the registration of the Aircraft. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or - 50 - 54 the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and the exclusions in the Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis (subject to the exclusions set forth in Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and against any increase in Taxes borne by such Person that results from such change in situs. In no event shall any change in situs of the trust affect Original Head Lessee's rights or obligations under the Amended and Restated Head Lease TIA. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that - 51 - 55 Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay expenses on an after tax basis relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was solely at the request of the Owner Participant. (e) The Trust Company agrees that if at any time it shall obtain actual knowledge that it has ceased to be or will likely cease to be a Citizen of the United States, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under such Federal Aviation Act or any other law to permit the continued registration of the Aircraft in the name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship would have any material adverse effect on any holder of Equipment Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of the successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement. SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the - 52 - 56 termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all obligations and liabilities under the Sublease Guaranty, other than in respect of the obligations and liabilities of the Original Head Lessee in respect of Sublessor's Liens as provided above. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor, shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent - 53 - 57 Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to (but excluding) the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. - 54 - 58 SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, - 55 - 59 addressed to it at ____________________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford, Connecticut 06115 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of- - 56 - 60 pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, the Subordination Agent and the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Hunton & Williams, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. - 57 - 61 SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Aircraft from the lien of the Indenture and the termination of the Indenture pursuant to - 58 - 62 and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 59 - 63 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:_______________________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA SUB I, INC. By:_______________________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:_______________________________________ Name: Title: Address: GPA House Shannon, County Clare, Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 60 - 64 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_______________________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [--------------------------------] By:_______________________________________ Name: Title: Address: Telephone: Telecopier: Attention: FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 61 - 65 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 62 - 66 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. 67 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price ------ ------ ---- ---- ----- Class A $ 11,897,518 02-Jan-2009 6.85% $ 11,897,518 Class B $ 4,413,774 02-Jul-2005 6.93% $ 4,413,774 Class C $ 4,552,621 02-Jan-2002 6.86% $ 4,552,621 Class D $ 4,249,113 02-Jan-2002 8.16% $ 4,249,113 Class E $ 2,541,597 02-Jul-2002 10.50% $ 2,541,597
68 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 69 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-15] TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-15], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, ___________________________, a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1990 AWA-15], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 70 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or - 2 - 71 right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, - 3 - 72 Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and - 4 - 73 remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required. 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - 5 - 74 (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; [(g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for - 6 - 75 taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and](1) (h) the Guarantor is [type of legal personality] with a [combined capital, surplus and undivided profits] [tangible net worth] of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to (1) This representation is not applicable if Transferee is a wholly-owned subsidiary of the Owner Participant. - 7 - 76 affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 77 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 78 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-15] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-15] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, ________________________________, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 79 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and - 2 - 80 compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it without a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee repre- sents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) on the date hereof it is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a [combined capital, surplus and undivided profits] [tangible net worth] of not less than $60,000,000. - 3 - 81 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:___________________________________ Title: [ASSIGNEE] By:___________________________________ Title: - 4 - 82 EXHIBIT C to REFUNDING AGREEMENT LIST OF COUNTRIES Australia Canada Denmark Finland France Germany Iceland Ireland Japan Luxembourg Netherlands New Zealand Norway Singapore South Korea Sweden Switzerland United Kingdom 83 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 84 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) Trust Agreement Supplement [GPA 1990 AWA-15] No. 2 dated November 26, 1996 (the "Trust Agreement Supplement") between the Owner Trustee and the Owner Participant, amending the Trust Agreement, which Trust Agreement Supplement was filed with the FAA at 12:20 p.m., C.S.T. on November 26, 1996; (b) First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-15] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1990 AWA-15] dated November 26, 1996 (the "Indenture Supplement") , with respect to the Aircraft, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (c) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as successor lessee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (d) Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] dated as of September 21, 1990 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the original Head Lease, with Lease Supplement [GPA 1990 AWA-15] No. 3 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Aircraft, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. Trust Agreement Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990 between _____________________________, as owner 85 participant, and Wilmington Trust Company, as owner trustee, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-15] No. 1 dated September 28, 1990. Original Indenture Trust Indenture and Security Agreement [GPA 1990 AWA-15] dated as of September 21, 1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut National Association, and The Connecticut National Bank), as indenture trustee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. L61291, as supplemented and amended by the following described instruments: Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Trust Indenture Supplement No. 1 09/28/90 09/28/90 L61291 Amendment No. 1 to Trust Indenture and Security Agreement [GPA 1990 AWA-15] 03/27/92 05/18/92 EE003013 Amendment No. 2 to Trust Indenture and Security Agreement as of [GPA 1990 AWA-15] 07/29/93 08/04/93 F59675
Original Head Lease Aircraft Lease Agreement [GPA 1990 AWA-15] dated as of September 21, 1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as lessor, and GPA Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. L61292, as supplemented by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Lease Supplement [GPA 1990 AWA-15] No. 1 09/28/90 09/28/90 L61292 Lease Supplement [GPA 1990 AWA-15] No. 2 12/31/91 (which was not filed for recordation with the FAA)
- 2 - 86 Sublease Aircraft Sublease Agreement [GPA 1990 AWA-15] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. L61293, as supplemented. and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Sublease Supplement No. 1 09/28/90 09/28/90 L61293 Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990 as of AWA-15] 08/26/91 09/11/91 X116697
Sublease Collateral Assignment Assignment of Sublease [GPA 1990 AWA-15] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as assignee, which was attached to and recorded as one instrument with the Sublease on September 28, 1990 and assigned Conveyance No. L61293. - 3 - EX-4.18 19 FORM OF REFUNDING AGREEMENT [GPA 1990 AWA-16] 1 Exhibit 4.18 - -------------------------------------------------------------------------------- REFUNDING AGREEMENT [GPA 1990 AWA-16] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA SUB I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements -------------------------------, as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 099 Registration No. N637AW Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS PAGE ---- SECTION 1. Purchase of Equipment Notes; Refunding ...................... 5 SECTION 2. Equipment Notes ............................................. 7 SECTION 3. Conditions Precedent ........................................ 7 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee .................................................... 15 SECTION 5. Amendment and Restatement of the Original Indenture ......................................... 19 SECTION 6. Amendment and Restatement of the Original Lease ............................................. 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc ........................................................ 19 SECTION 8. Representations and Warranties of the Lessee ..................................................... 20 SECTION 9. Representations and Warranties .............................. 25 SECTION 10. Transfer of Owner Participant's Interest ................................................... 42 SECTION 11. Re-Registration of the Aircraft ............................. 45 SECTION 12. Quiet Enjoyment ............................................. 47 SECTION 13. Liens ....................................................... 47 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant ...................................... 49 SECTION 15. Certain Retained Rights and Releases ........................ 52 - i - 3 SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee ...................... 54 SECTION 17. Lessee Protection of Title .................................. 55 SECTION 18. Jurisdictional and Related Matters .......................... 55 SECTION 19. Limitation on Recourse ...................................... 56 SECTION 20. Notices ..................................................... 56 SECTION 21. Expenses .................................................... 56 SECTION 22. Reliance of Liquidity Provider .............................. 58 SECTION 23. Miscellaneous ............................................... 58 SECTION 24. Governing Law ............................................... 59 SECTION 25. Effectiveness ............................................... 59 Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1990 AWA-16] REFUNDING AGREEMENT [GPA 1990 AWA-16] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) ________________________________, a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the five separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Sanwa International PLC, as Lender (and predecessor in interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, as amended by the Letter Agreement dated as of July 29, 1993 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one Airbus A320-231 aircraft (the "Aircraft"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the 5 Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 to Trust Indenture and Security Agreement dated March 27, 1992, and as further amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29, 1993 (as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued loan certificates substantially in the form set forth in Section 2.02 thereof (the "Original Certificates") to the Lenders as evidence of the indebtedness then being made by the Owner Trustee to finance a portion of the purchase price of the Aircraft; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, as supplemented by Lease Supplement [GPA 1990 AWA-16] No. 1 dated September 28, 1990, and as further supplemented by Lease Supplement No. 2 dated as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1990 AWA-16] dated as of September 21, 1990 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-16] No. 1 dated September 28, 1990 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-16], dated as of - 2 - 6 September 21, 1990 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-16] dated September 28, 1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990 AWA-16] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1990 AWA-16] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of the Original Head Lessee under Section 21(f) of the Sublease; WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1990 AWA-16], dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease [GPA 1990 AWA-16] dated as of September 21, 1990 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-16], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 2 dated the Restatement Date (the "First Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in five series, the proceeds from the - 3 - 7 issuance and sale of which will be applied in part to the prepayment in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the Original Lease as the Amended and Restated Lease (as so amended and restated, the "Lease"); WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1990 AWA-16] No. 2 ("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the Head Lease TIA (as so amended and restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, five separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving - 4 - 8 credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus an amount (the "Prepayment Amount") equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.12 of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to the aggregate principal amount of the Original Certificates outstanding on the Restatement Date, together with accrued and unpaid - 5 - 9 interest on the Original Certificates up to but not including the Restatement Date plus the Prepayment Amount; (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of principal, interest, Break Funding Cost, if any, described in clause (iii) above, owing to them on the Restatement Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 2); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 2; (ix) the Original Head Lessee and the Owner Participant shall enter into the Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" aircraft to the Lessee and the obligation of the Lessee to accept and lease such aircraft (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate - 6 - 10 principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in - 7 - 11 Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) Trust Supplement No. 2; (4) the First Amended and Restated Indenture and Trust Indenture Supplement No. 2; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: - 8 - 12 (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (1), (5) and (6) below, a certificate signed by an authorized officer of the Lessee and, in the case of (2), (3) and (4) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness and has a current, valid certificate of airworthiness; (2) the Aircraft FAA Bill of Sale (as defined in the Participation Agreement), the Original Lease - 9 - 13 (excluding Lease Supplement No. 2) and the Original Indenture have each been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (3) Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering the Aircraft shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; (4) the Aircraft has been registered with the FAA in the name of the Owner Trustee; (5) the Lessee has authority to operate the Aircraft; and (6) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; - 10 - 14 (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by- laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). - 11 - 15 (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable authority designated by the board of directors thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized representative of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. - 12 - 16 (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Hunton & Williams, special counsel for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. - 13 - 17 (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Original Head Lessee, the Lessee, GPA Leasing USA I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the - 14 - 18 case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the Lease. (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Amended and Restated Lease (including Lease Supplement No. 3) and the First Amended and Restated Indenture (including Trust Indenture Supplement No. 2) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: - 15 - 19 (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; - 16 - 20 (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 3; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; - 17 - 21 (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass - 18 - 22 Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the Original Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the First Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the First Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the First Amended and Restated Indenture. The First Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the Original Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the Original Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect from and including the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no - 19 - 23 obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, - 20 - 24 or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect, (B) the registration of the Aircraft pursuant to the Federal Aviation Act and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in - 21 - 25 the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any - 22 - 26 other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain - 23 - 27 any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings or the non-payment of such Taxes do not involve any material danger to the sale, forfeiture or loss of the Aircraft; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Aircraft under - 24 - 28 the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Aircraft. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a banking association duly organized, validly existing and in good standing under the federal laws of the United States of America, is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (as so defined, a "Citizen of the United States") (without making use of a voting trust, voting powers agreement or similar arrangement), will notify promptly all parties to this Agreement if in its reasonable opinion its status as a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement) is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Indenture promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States (without making use of a voting trust, voting powers agreement or similar arrangement), and has the full corporate power, authority and legal right under the laws of the State of Connecticut and the federal laws of the United States pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Indenture and each other Operative Document to which it is a party; (2) neither the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and - 25 - 29 provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation or any judgment or order applicable to or binding on it of any United States governmental authority or agency governing the trust powers of the Indenture Trustee; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any State of Connecticut or any United States of America governmental authority or agency regulating the trust powers of the Indenture Trustee is required for the execution and delivery of, or the carrying out by, the Indenture Trustee of any of the transactions contemplated hereby or by the Indenture, Lease - 26 - 30 Amendment No. 1 or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (6) there are no Lenders' Liens (as defined in the Lease) on the Aircraft or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (7) it has possession of the chattel paper original counterpart of the Original Lease, Lease Amendment No. 1 and the Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 2, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of - 27 - 31 creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 2, the Original Indenture, the Indenture, the Original Lease, Lease Amendment No. 1, the Lease, the Equipment Notes, or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel - 28 - 32 mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States of America governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of Delaware or any political subdivision thereof in connection with the prepayment of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual - 29 - 33 capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; (10) both its chief executive office, and the place where its records concerning the Aircraft and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto; and (11) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust Supplement No. 2 have been duly authorized, executed and delivered by it; and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement, the Trust Agreement, the SLV Letter - 30 - 34 Agreement and the Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee other than the laws, rules or regulations relating to aircraft lease transactions generally or to the - 31 - 35 citizenship requirements of the Owner Participant under the Federal Aviation Act); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Amended and Restated Head Lease TIA; (5) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens); and (6) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). If at any time Owner Participant has ceased to be, or shall have actual knowledge that it is likely to cease to be, such a citizen, and (i) the Aircraft shall be or would thereupon become ineligible for registration in the name of Owner Trustee under the Federal Aviation Act as in effect at such time (without regard to the "based and primarily used" provisions thereof) and the regulations then applicable thereunder, or (ii) the Aircraft is registered in a jurisdiction other than the United States of America, in circumstances in which the preceding clause (i) does not apply and the Lessee or any Permitted Sublessee at any time proposes to register the Aircraft in the United States of America, then Owner Participant shall (at its own expense and without any reimbursement or indemnification from the Lessee or any Permitted Sublessee) (A) immediately either (1) transfer in accordance with Section 10 hereof all of its right, title and interest in and to the Trust Agreement, the Trust Estate, this Agreement and the Amended and Restated Head Lease TIA or (2) take such other action, including, without limitation, the establishment of a voting trust or voting powers agreement (in which case Owner Participant shall remain the beneficial owner of the Trust Estate), as may be necessary to prevent the deregistration of the Aircraft under the Federal Aviation Act or to maintain such registration of the Aircraft or to make possible such registration of the Aircraft in the United States of - 32 - 36 America and to prevent Indenture Trustee, the Holders of the Equipment Notes, the Lessee or any Permitted Sublessee from being adversely affected as a result thereof and (B) indemnify the Lessee, the Indenture Trustee, the Holders of the Equipment Notes and any Permitted Sublessee, from and against any and all Claims incurred or suffered as a result of Owner Participant's failure to be such a citizen or loss of such citizenship, including, without limitation, as a result of the Aircraft's becoming ineligible or ceasing to remain eligible for such registration. (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any - 33 - 37 law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of - 34 - 38 the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. - 35 - 39 (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, - 36 - 40 the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent - 37 - 41 authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default - 38 - 42 would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Aircraft free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Aircraft, and Permitted Liens under the Original Lease; (7) title to the Buyer Furnished Equipment for the Aircraft has been transferred to the Owner Trustee in accordance with Section 8(y) of the Participation Agreement. As of the Restatement Date, there are no existing Claims against Parent Guarantor or Original Head Lessee with respect to Buyer Furnished Equipment; and (8) except for the registration of the Aircraft pursuant to the Federal Aviation Act, the filing for recordation pursuant to the Federal Aviation Act (with - 39 - 43 confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Aircraft as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Aircraft and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, - 40 - 44 except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Aircraft, the Airframe, each Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty with - 41 - 45 respect to Section 9(f)(8) shall be only for the benefit of the Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by operation of law, consolidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom or permit the transfer of any of its stock in any transaction which has the practical effect of any of the foregoing; provided that, and subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions, and Owner Participant agrees for the express benefit of each party hereto that any such transfer will comply with such conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank, trust company or other like regulated financial institution with a combined capital, surplus and undivided profits of, or a corporation with a tangible net worth of, in either case at least $60,000,000, (B) any wholly-owned subsidiary of such bank, trust company, financial institution or corporation if such bank, trust company, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; - 42 - 46 (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and does not violate clause (viii) below; provided that if such Transferee is a subsidiary of Owner Participant, such notice may be given promptly following rather than prior to such transfer if such Transferee meets the net worth requirement set forth above on its own account without a guaranty and otherwise meets the requirements of this Section 10; (iii) upon giving effect to such transfer, such Transferee is a Citizen of the United States and such Transferee shall deliver to Lessee an affidavit to such effect; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not violate any provision of ERISA or any rules or regulations thereunder; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, any Person engaged in the business of parcel transport by air or a subsidiary or an Affiliate of such an airline, a commercial air carrier, an air freight forwarder, Person engaged in the business of parcel transport by air or other similar Person; - 43 - 47 (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Aircraft previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Amended and Restated Head Lease TIA by or against Owner Participant which have accrued or been made prior to the date of such transfer. The transferor Owner Participant shall pay the reasonable expenses of each party hereto related to any such transfer. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. The Lessee shall have no obligation to prevent any such deregistration or assist in maintaining or otherwise enhancing the Aircraft's - 44 - 48 eligibility for registration by restricting the use of the Aircraft. SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee agrees, that if the Owner Participant consents thereto, which consent shall not be unreasonably withheld, at any time after the Restricted Use Period, Lessee may, in connection with effecting a Permitted Sublease elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit C hereto (or such other country as the Owner Participant approves) and (b) the following conditions are met: (i) unless the country of registry is Taiwan, the United States of America maintains normal diplomatic relations with the country of registry of the Aircraft, and if the country of registry is Taiwan, the United States of America maintains diplomatic relations at least as good as those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner Participant and the Indenture Trustee shall have received favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably acceptable to the Owner Participant to the effect of the following and as to such other matters as the Owner Participant may reasonably request: (A) the Owner Trustee's ownership interest in the Aircraft and interest in the Lease and any Permitted Sublease shall be recognized under the laws of such jurisdiction, (B) the obligations of Lessee, and the rights and remedies of the Owner Trustee, under the Lease shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such jurisdiction (or the laws of the jurisdiction to which the laws of such jurisdiction would refer as the applicable governing law), (C) after giving effect to such change in registration, the Lien of the Indenture on the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and any Permitted Sublease shall continue as a valid and duly perfected security interest and all filing, recording or other action necessary to protect the same and the Owner Trustee's ownership interest in the Aircraft shall have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording or other action is necessary and (2) the Owner Trustee and the Indenture - 45 - 49 Trustee shall have received a certificate from Lessee that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be delivered to the Owner Trustee and the Indenture Trustee on or prior to the effective date of such change in registration), (D) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Owner Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate thereof), as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), (F) (unless Lessee shall have agreed, or pursuant to the Lease shall have been required, to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (i) the insurance required by Section 12 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and the Owner Trustee and the Indenture Trustee shall have received a certificate of the type described in Section 12(f) of the Lease and (ii) the aircraft maintenance standards of the new country of registry shall not be materially less stringent from those of the United States of America or not materially less stringent from those of the United Kingdom and the Owner Trustee and the Indenture Trustee shall have received a certificate to such effect signed by the President, any Executive Vice President or any Senior Vice President of Lessee which certificate shall, as among the parties hereto, be presumed to be correct as to the matters stated therein absent conclusive evidence to the contrary. Lessee shall pay all reasonable costs, - 46 - 50 expenses, fees, and recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person lawfully claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. - 47 - 51 Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Aircraft or any other portion of the Trust Estate or the Indenture Estate. Each of the - 48 - 52 Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien (including, without limitation, Claims against Lessor and Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement except in accordance with the terms thereof, provided that any such amendment, supplement or modification shall not adversely affect the Lessee, and (iii) not to terminate or revoke the Trust Agreement except in accordance with the terms thereof, provided that any such termination or revocation shall not adversely affect the Lessee. (b) Notwithstanding anything to the contrary in the Trust Agreement or Section 14(a) hereof, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall - 49 - 53 not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30 days' prior notice thereof and (B) if, within 15 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made, and (D) such change does not affect the registration of the Aircraft. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or - 50 - 54 the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and the exclusions in the Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis (subject to the exclusions set forth in Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and against any increase in Taxes borne by such Person that results from such change in situs. In no event shall any change in situs of the trust affect Original Head Lessee's rights or obligations under the Amended and Restated Head Lease TIA. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that - 51 - 55 Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay expenses on an after tax basis relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was solely at the request of the Owner Participant. (e) The Trust Company agrees that if at any time it shall obtain actual knowledge that it has ceased to be or will likely cease to be a Citizen of the United States, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under such Federal Aviation Act or any other law to permit the continued registration of the Aircraft in the name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship would have any material adverse effect on any holder of Equipment Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of the successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement. SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the - 52 - 56 termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all obligations and liabilities under the Sublease Guaranty, other than in respect of the obligations and liabilities of the Original Head Lessee in respect of Sublessor's Liens as provided above. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor, shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent - 53 - 57 Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to (but excluding) the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. - 54 - 58 SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, - 55 - 59 addressed to it at ________________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford, Connecticut 06115 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of- - 56 - 60 pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, the Subordination Agent and the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Hunton & Williams, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. - 57 - 61 SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Aircraft from the lien of the Indenture and the termination of the Indenture pursuant to - 58 - 62 and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 59 - 63 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:_______________________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA SUB I, INC. By:_______________________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:_______________________________________ Name: Title: Address: GPA House Shannon, County Clare, Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 60 - 64 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_______________________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [___________________________________] By:_______________________________________ Name: Title: Address: Telephone: Telecopier: Attention: FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 61 - 65 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 62 - 66 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. 67 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price - ------------ --------- -------- -------- -------- Class A $ 11,897,518 02-Jan-2009 6.85% $ 11,897,518 Class B $ 4,413,774 02-Jul-2005 6.93% $ 4,413,774 Class C $ 4,552,621 02-Jan-2002 6.86% $ 4,552,621 Class D $ 4,249,113 02-Jan-2002 8.16% $ 4,249,113 Class E $ 2,541,597 02-Jul-2002 10.50% $ 2,541,597
68 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 69 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-16] TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-16], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, _________________________________, a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1990 AWA-16], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 70 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or - 2 - 71 right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, - 3 - 72 Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and - 4 - 73 remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required. 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - 5 - 74 (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; [(g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for - 6 - 75 taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and](1) (h) the Guarantor is [type of legal personality] with a [combined capital, surplus and undivided profits] [tangible net worth] of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to - -------- (1) This representation is not applicable if Transferee is a wholly-owned subsidiary of the Owner Participant. - 7 - 76 affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 77 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 78 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-16] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-16] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, ____________________________, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 79 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and - 2 - 80 compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it without a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) on the date hereof it is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and the rules and regulations of the FAA thereunder; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a [combined capital, surplus and undivided profits] [tangible net worth] of not less than $60,000,000. - 3 - 81 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:________________________________ Title: [ASSIGNEE] By:________________________________ Title: - 4 - 82 EXHIBIT C to REFUNDING AGREEMENT LIST OF COUNTRIES Australia Canada Denmark Finland France Germany Iceland Ireland Japan Luxembourg Netherlands New Zealand Norway Singapore South Korea Sweden Switzerland United Kingdom 83 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 84 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) Trust Agreement Supplement [GPA 1990 AWA-16] No. 2 dated November 26, 1996 (the "Trust Agreement Supplement") between the Owner Trustee and the Owner Participant, amending the Trust Agreement, which Trust Agreement Supplement was filed with the FAA at 12:20 p.m., C.S.T. on November 26, 1996; (b) First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-16] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1990 AWA-16] dated November 26, 1996 (the "Indenture Supplement") with respect to the Aircraft, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (c) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as successor lessee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (d) Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of September 21, 1990 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease, with Lease Supplement [GPA 1990 AWA-16] No. 3 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Aircraft, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. Trust Agreement Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990 between __________________________, as owner 85 participant, and Wilmington Trust Company, as owner trustee, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-16] No. 1 dated September 28, 1990. Original Indenture Trust Indenture and Security Agreement [GPA 1990 AWA- 16] dated as of September 21, 1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), as indenture trustee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. P92334, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. Trust Indenture Supplement No. 1 09/28/90 09/28/90 P92334 Amendment No. 1 to Trust Indenture and Security Agreement [GPA 1990 AWA-16] 03/27/92 05/18/92 EE003012 Amendment No. 2 to Trust Indenture and Security Agreement as of [GPA 1990 AWA-16] 07/29/93 08/04/93 FS9676
Original Head Lease Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of September 21, 1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as lessor, and GPA Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. P92335, as supplemented by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. Lease Supplement [GPA 1990 AWA-16] No. 1 09/28/90 09/28/90 P92335 Lease Supplement [GPA 1990 AWA-16] No. 2 12/31/91 (which was not filed for recordation with the FAA)
- 2 - 86 Sublease Aircraft Sublease Agreement [GPA 1990 AWA-16] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on September 28, 1990 and assigned Conveyance No. P92336, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. Sublease Supplement No. 1 09/28/90 09/28/90 P92336 Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990 as of AWA-16] 08/26/91 09/11/91 Y36535
Sublease Collateral Assignment Assignment of Sublease [GPA 1990 AWA-16] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as assignee, which was attached to and recorded as one instrument with the Sublease on September 28, 1990 and assigned Conveyance No. P92336. - 3 - EX-4.19 20 FORM OF REFUNDING AGREEMENT [GPA 1991 AWA-E1] 1 Exhibit 4.19 ------------------------------------------------------------------------------ REFUNDING AGREEMENT [GPA 1991 AWA-E1] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements --------------------------------, as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee ------------------------------------------------------------------------------ Secured Equipment Notes Covering One IAE International Aero Engines AG V2500-A1 Engine Manufacturer's Serial No. V0025 Leased by America West Airlines, Inc. ------------------------------------------------------------------------------ 2 TABLE OF CONTENTS PAGE ---- SECTION 1. Purchase of Equipment Notes; Refunding......................... 5 SECTION 2. Equipment Notes................................................ 7 SECTION 3. Conditions Precedent........................................... 7 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee.................................................... 15 SECTION 5. Amendment and Restatement of the Original Indenture......................................... 18 SECTION 6. Amendment and Restatement of the Original Lease............................................. 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc........................................................ 19 SECTION 8. Representations and Warranties of the Lessee..................................................... 19 SECTION 9. Representations and Warranties................................. 24 SECTION 10. Transfer of Owner Participant's Interest................................................... 39 SECTION 11. [Reserved]..................................................... 42 SECTION 12. Quiet Enjoyment................................................ 42 SECTION 13. Liens.......................................................... 43 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant...................................... 45 SECTION 15. Certain Retained Rights and Releases........................... 48 - i - 3 PAGE ---- SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee...................... 50 SECTION 17. Lessee Protection of Title..................................... 50 SECTION 18. Jurisdictional and Related Matters............................. 50 SECTION 19. Limitation on Recourse......................................... 51 SECTION 20. Notices........................................................ 52 SECTION 21. Expenses....................................................... 52 SECTION 22. Reliance of Liquidity Provider................................. 53 SECTION 23. Miscellaneous.................................................. 53 SECTION 24. Governing Law.................................................. 54 SECTION 25. Effectiveness.................................................. 54 Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1991 AWA-E1] REFUNDING AGREEMENT [GPA 1991 AWA-E1] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) _______________________________, a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the five separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Sanwa International PLC, as Lender (and predecessor in interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one IAE International Aero Engines AG V2500-A1 Engine (the "Engine"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the 5 Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 to Trust Indenture and Security Agreement dated March 27, 1992, and as further amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29, 1993 (as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued loan certificates substantially in the form set forth in Section 2.02 thereof (the "Original Certificates") to the Lenders as evidence of the indebtedness then being made by the Owner Trustee to finance a portion of the purchase price of the Engine; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991 AWA-E1] No. 1 dated March 27, 1991 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Engine commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1991 AWA-E1] dated as of March 15, 1991 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E1] No. 1 dated March 27, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); - 2 - 6 WHEREAS, prior to the execution and delivery of the Participation Agreement, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Engine Sublease Agreement [GPA 1990 AWA-E1] dated as of December 12, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-E1] dated February 8, 1991, as amended by Amendment No. 1 to Engine Sublease Agreement [GPA 1990 AWA-E1] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Engine commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease [GPA 1991 AWA-E1] dated as of March 15, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E1], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 2 dated the Restatement Date (the "First Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in five series, the proceeds from the issuance and sale of which will be applied in part to the prepayment in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the Original Lease as the Amended and Restated Lease (as so amended and restated, the "Lease"); - 3 - 7 WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1991 AWA-E1] No. 2 ("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the Head Lease TIA (as so amended and restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, five separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; - 4 - 8 NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus an amount (the "Prepayment Amount") equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.12 of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to the aggregate principal amount of the Original Certificates outstanding on the Restatement Date, together with accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus the Prepayment Amount; (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of principal, interest, Break Funding Cost, if any, described in clause (iii) above, owing to them on the Restatement Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; - 5 - 9 (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 2); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 2; (ix) the Original Head Lessee and the Owner Participant shall enter into the Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" engines to the Lessee and the obligation of the Lessee to accept and lease such engines (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New - 6 - 10 York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall - 7 - 11 not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) Trust Supplement No. 2; (4) the First Amended and Restated Indenture and Trust Indenture Supplement No. 2; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; - 8 - 12 (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (3) below, a certificate signed by an authorized officer of the Lessee and, in the case of (1) and (2) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Original Lease and the Original Indenture have each been duly recorded with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (2) Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering the Engine shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; and (3) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in - 9 - 13 which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of - 10 - 14 the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable authority designated by the board of directors thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; - 11 - 15 (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized representative of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Hunton & Williams, special counsel - 12 - 16 for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Original Head Lessee, the Lessee, GPA Leasing USA Sub I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. - 13 - 17 (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $200,000 from the Lessee in the form of Exhibit D-2 to the Lease. - 14 - 18 (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Amended and Restated Lease (including Lease Supplement No. 2) and the First Amended and Restated Indenture (including Trust Indenture Supplement No. 2) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) the Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases - 15 - 19 and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. - 16 - 20 (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and - 17 - 21 (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the Original Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the First Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the First Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the First Amended and Restated Indenture. The First - 18 - 22 Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the Original Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the Original Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect from and including the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the - 19 - 23 "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities - 20 - 24 having jurisdiction with respect to the Engine required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a - 21 - 25 Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Engine as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Engine and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be - 22 - 26 due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings or the non-payment of such Taxes do not involve any material danger to the sale, forfeiture or loss of the Engine; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets - 23 - 27 Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Engine under the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Engine. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a banking association duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the laws of the State of Connecticut and the federal laws of the United States pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this - 24 - 28 Agreement, the Indenture and each other Operative Document to which it is a party; (2) neither the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation or any judgment or order applicable to or binding on it of any United States governmental authority or agency governing the trust powers of the Indenture Trustee; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; - 25 - 29 (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any State of Connecticut or any United States of America governmental authority or agency regulating the trust powers of the Indenture Trustee is required for the execution and delivery of, or the carrying out by, the Indenture Trustee of any of the transactions contemplated hereby or by the Indenture, Lease Amendment No. 1 or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (6) there are no Lenders' Liens (as defined in the Lease) on the Engine or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (7) it has possession of the chattel paper original counterpart of the Original Lease, Lease Amendment No. 1 and the Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 2, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the - 26 - 30 due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 2, the Original Indenture, the Indenture, the Original Lease, Lease Amendment No. 1, the Lease, the Equipment Notes, or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval - 27 - 31 or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States of America governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of - 28 - 32 Delaware or any political subdivision thereof in connection with the prepayment of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; and (10) both its chief executive office, and the place where its records concerning the Engine and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto. (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust - 29 - 33 Supplement No. 2 have been duly authorized, executed and delivered by it; and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee - 30 - 34 other than the laws, rules or regulations relating to engine lease transactions generally); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Amended and Restated Head Lease TIA; and (5) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens). (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; - 31 - 35 (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection - 32 - 36 with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and - 33 - 37 (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument - 34 - 38 to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; - 35 - 39 (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any - 36 - 40 indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Engine free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Engine, and Permitted Liens under the Original Lease; (7) [Intentionally Omitted]; and (8) except for the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all - 37 - 41 with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Engine as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Engine and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; - 38 - 42 (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty with respect to Section 9(f)(8) shall be only for the benefit of the Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by operation of law, con- - 39 - 43 solidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Engine, the Lease, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom or permit the transfer of any of its stock in any transaction which has the practical effect of any of the foregoing; provided that, and subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Engine, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions, and Owner Participant agrees for the express benefit of each party hereto that any such transfer will comply with such conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank, trust company or other like regulated financial institution with a combined capital, surplus and undivided profits of, or a corporation with a tangible net worth of, in either case at least $60,000,000, (B) any wholly-owned subsidiary of such bank, trust company, financial institution or corporation if such bank, trust company, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed trans- feree qualifies as a "Transferee" under clause (i) above and - 40 - 44 does not violate clause (viii) below; provided that if such Transferee is a subsidiary of Owner Participant, such notice may be given promptly following rather than prior to such transfer if such Transferee meets the net worth requirement set forth above on its own account without a guaranty and otherwise meets the requirements of this Section 10; (iii) [Intentionally Omitted]; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not violate any provision of ERISA or any rules or regulations thereunder; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, any Person engaged in the business of parcel transport by air or a subsidiary or an Affiliate of such an airline, a commercial air carrier, an air freight forwarder, Person engaged in the business of parcel transport by air or other similar Person; (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's - 41 - 45 guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Engine previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Amended and Restated Head Lease TIA by or against Owner Participant which have accrued or been made prior to the date of such transfer. The transferor Owner Participant shall pay the reasonable expenses of each party hereto related to any such transfer. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. SECTION 11. [Reserved]. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming - 42 - 46 by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Engine under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person lawfully claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee - 43 - 47 and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Engine or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Engine or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of the Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any - 44 - 48 such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement except in accordance with the terms thereof, provided that any such amendment, supplement or modification shall not adversely affect the Lessee, and (iii) not to terminate or revoke the Trust Agreement except in accordance with the terms thereof, provided that any such termination or revocation shall not adversely affect the Lessee. (b) Notwithstanding anything to the contrary in the Trust Agreement or Section 14(a) hereof, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30 days' prior notice thereof and (B) if, within 15 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of - 45 - 49 counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, and (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and the exclusions in the Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established - 46 - 50 trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis (subject to the exclusions set forth in Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and against any increase in Taxes borne by such Person that results from such change in situs. In no event shall any change in situs of the trust affect Original Head Lessee's rights or obligations under the Amended and Restated Head Lease TIA. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Engine as contemplated hereby. Lessee shall pay expenses on an after tax basis relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was solely at the request of the Owner Participant. - 47 - 51 SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed that Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor, shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, - 48 - 52 any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to (but excluding) the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance - 49 - 53 with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, - 50 - 54 Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, addressed to it at _________________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford, Connecticut 06115 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. - 51 - 55 SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, the Subordination Agent and the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Hunton & Williams, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; - 52 - 56 (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, - 53 - 57 the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Engine from the lien of the Indenture and the termination of the Indenture pursuant to and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 54 - 58 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:_______________________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA I, INC. By:_______________________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:_______________________________________ Name: Title: Address: GPA House Shannon, County Clare, Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 55 - 59 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_______________________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [______________________________________] By:_______________________________________ Name: Title: Address: Telephone: Telecopier: Attention: FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 56 - 60 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 57 - 61 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. 62 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price - ------------ ---------- ----------- -------- ---------- Class A $1,343,995 02-Jul-2009 6.85% $1,343,995 Class B $ 503,996 02-Jan-2006 6.93% $ 503,996 Class C $ 524,996 02-Jan-2004 6.86% $ 524,996 Class D $ 489,995 02-Jul-2002 8.16% $ 489,995 Class E $1,458,204 02-Jan-2004 10.50% $1,458,204
63 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 64 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E1] TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E1], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, ______________________________, a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1991 AWA-E1], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 65 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or - 2 - 66 right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, - 3 - 67 Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and - 4 - 68 remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required. 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - 5 - 69 (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; [(g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for - 6 - 70 taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and]1 (h) the Guarantor is [type of legal personality] with a [combined capital, surplus and undivided profits] [tangible net worth] of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to - -------- 1 This representation is not applicable if Transferee is a wholly-owned subsidiary of the Owner Participant. - 7 - 71 affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 72 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 73 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E1] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E1] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, _________________________________, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 74 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and - 2 - 75 compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it without a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) [Intentionally Omitted]; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a [combined capital, surplus and undivided profits] [tangible net worth] of not less than $60,000,000. 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. - 3 - 76 IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:___________________________________ Title: [ASSIGNEE] By:___________________________________ Title: - 4 - 77 EXHIBIT C to REFUNDING AGREEMENT [INTENTIONALLY OMITTED] 78 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 79 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1991 AWA-E1] dated November 26, 1996 (the "Indenture Supplement") , with respect to the Engine, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (b) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as assignee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996 and (c) Amended and Restated Engine Lease Agreement, [GPA 1991 AWA-E1] dated as of March 15, 1991 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease, with Lease Supplement [GPA 1991 AWA-E1] No. 2 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Engine, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m. C.S.T. on November 26, 1996. Trust Agreement Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee, and ________________________________ ________________________________, as owner participant, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E1] No. 1 dated March 27, 1991, which were not filed with the FAA. Original Indenture 80 Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), as indenture trustee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. 259534, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- ------------------------------------ Trust Indenture Supplement No. 1 03/27/91 03/28/91 259534 Amendment No. 1 to Trust Indenture and Security Agreement 03/27/92 04/30/92 DD002565 Amendment No. 2 to Trust Indenture and as of Security Agreement 07/29/93 08/04/93 F59677
Original Head Lease Engine Lease Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as lessor, and GPA Leasing USA I, Inc., as lessee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. 259535, as supplemented by the following described instrument:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- ------------------------------------ Lease Supplement [GPA 1991 AWA-E1] No. 1 03/27/91 03/28/91 259535
Sublease Engine Sublease Agreement [GPA 1990 AWA-E1] dated as of December 12, 1990 between GPA Leasing USA I, Inc. , as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on February 19, 1991 and assigned Conveyance No. AA46491, as supplemented and amended by the following described instruments: Date of FAA FAA - 2 - 81
Instrument Instrument Recording Date Conveyance No. - ---------- ---------- ------------------------------------ Sublease Supplement No. 1 02/08/91 02/19/91 AA46491 Amendment No. 1 to Engine Sublease Agreement [GPA 1990 as of AWA-E1] 08/26/91 09/11/91 J68135
Sublease Collateral Assignment Assignment of Sublease [GPA 1991 AWA-E1] dated as of March 15, 1991 between GPA Leasing USA I, Inc., as assignor, and Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as supplemented, as assignee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. 259536. - 3 - EX-4.20 21 FORM OF REFUNDING AGREEMENT [GPA 1991 AWA-E2] 1 Exhibit 4.20 REFUNDING AGREEMENT [GPA 1991 AWA-E2] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements ----------------------------, as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee Secured Equipment Notes Covering One IAE International Aero Engines AG V2500-A1 Engine Manufacturer's Serial No. V0049 Leased by America West Airlines, Inc. 2 TABLE OF CONTENTS
PAGE ---- SECTION 1. Purchase of Equipment Notes; Refunding.......................................... 5 SECTION 2. Equipment Notes................................................................. 7 SECTION 3. Conditions Precedent............................................................ 7 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee........................................................................ 15 SECTION 5. Amendment and Restatement of the Original Indenture............................................................. 18 SECTION 6. Amendment and Restatement of the Original Lease................................................................. 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc............................................................................ 19 SECTION 8. Representations and Warranties of the Lessee......................................................................... 19 SECTION 9. Representations and Warranties.................................................. 24 SECTION 10. Transfer of Owner Participant's Interest....................................................................... 39 SECTION 11. [Reserved] ..................................................................... 42 SECTION 12. Quiet Enjoyment................................................................. 42 SECTION 13. Liens ..................................................................... 43 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant.......................................................... 45 SECTION 15. Certain Retained Rights and Releases............................................ 48
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PAGE ---- SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee................................. 50 SECTION 17. Lessee Protection of Title....................................................... 50 SECTION 18. Jurisdictional and Related Matters............................................... 50 SECTION 19. Limitation on Recourse........................................................... 51 SECTION 20. Notices ...................................................................... 52 SECTION 21. Expenses ...................................................................... 52 SECTION 22. Reliance of Liquidity Provider................................................... 53 SECTION 23. Miscellaneous.................................................................... 53 SECTION 24. Governing Law.................................................................... 54 SECTION 25. Effectiveness.................................................................... 54
Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1991 AWA-E2] REFUNDING AGREEMENT [GPA 1991 AWA-E2] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) ______________________________, a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the five separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Sanwa International PLC, as Lender (and predecessor in interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one IAE International Aero Engines AG V2500-A1 Engine (the "Engine"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the 5 Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 to Trust Indenture and Security Agreement dated March 27, 1992, and as further amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29, 1993 (as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued loan certificates substantially in the form set forth in Section 2.02 thereof (the "Original Certificates") to the Lenders as evidence of the indebtedness then being made by the Owner Trustee to finance a portion of the purchase price of the Engine; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991 AWA-E2] No. 1 dated March 27, 1991 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Engine commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1991 AWA-E2] dated as of March 15, 1991 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E2] No. 1 dated March 27, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); - 2 - 6 WHEREAS, prior to the execution and delivery of the Participation Agreement, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Engine Sublease Agreement [GPA 1990 AWA-E2] dated as of December 12, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-E2] dated February 8, 1991, as amended by Amendment No. 1 to Engine Sublease Agreement [GPA 1990 AWA-E2] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Engine commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease [GPA 1991 AWA-E2] dated as of March 15, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E2], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 2 dated the Restatement Date (the "First Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in five series, the proceeds from the issuance and sale of which will be applied in part to the prepayment in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the Original Lease as the Amended and Restated Lease (as so amended and restated, the "Lease"); - 3 - 7 WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1991 AWA-E2] No. 2 ("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the Head Lease TIA (as so amended and restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, five separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; - 4 - 8 NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus an amount (the "Prepayment Amount") equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.12 of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to the aggregate principal amount of the Original Certificates outstanding on the Restatement Date, together with accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus the Prepayment Amount; (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of principal, interest, Break Funding Cost, if any, described in clause (iii) above, owing to them on the Restatement Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; - 5 - 9 (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 2); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 2; (ix) the Original Head Lessee and the Owner Participant shall enter into the Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" engines to the Lessee and the obligation of the Lessee to accept and lease such engines (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New - 6 - 10 York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall - 7 - 11 not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) Trust Supplement No. 2; (4) the First Amended and Restated Indenture and Trust Indenture Supplement No. 2; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; - 8 - 12 (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (3) below, a certificate signed by an authorized officer of the Lessee and, in the case of (1) and (2) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Original Lease and the Original Indenture have each been duly recorded with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (2) Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering the Engine shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; and (3) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in - 9 - 13 which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of - 10 - 14 the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable authority designated by the board of directors thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; - 11 - 15 (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized representative of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Hunton & Williams, special counsel - 12 - 16 for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Original Head Lessee, the Lessee, GPA Leasing USA Sub I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. - 13 - 17 (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $200,000 from the Lessee in the form of Exhibit D-2 to the Lease. - 14 - 18 (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Amended and Restated Lease (including Lease Supplement No. 2) and the First Amended and Restated Indenture (including Trust Indenture Supplement No. 2) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) the Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases - 15 - 19 and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. - 16 - 20 (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and - 17 - 21 (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the Original Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the First Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the First Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the First Amended and Restated Indenture. The First - 18 - 22 Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the Original Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the Original Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect from and including the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the - 19 - 23 "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities - 20 - 24 having jurisdiction with respect to the Engine required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a - 21 - 25 Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Engine as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Engine and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be - 22 - 26 due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings or the non-payment of such Taxes do not involve any material danger to the sale, forfeiture or loss of the Engine; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets - 23 - 27 Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Engine under the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Engine. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a banking association duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the laws of the State of Connecticut and the federal laws of the United States pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this - 24 - 28 Agreement, the Indenture and each other Operative Document to which it is a party; (2) neither the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation or any judgment or order applicable to or binding on it of any United States governmental authority or agency governing the trust powers of the Indenture Trustee; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; - 25 - 29 (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any State of Connecticut or any United States of America governmental authority or agency regulating the trust powers of the Indenture Trustee is required for the execution and delivery of, or the carrying out by, the Indenture Trustee of any of the transactions contemplated hereby or by the Indenture, Lease Amendment No. 1 or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (6) there are no Lenders' Liens (as defined in the Lease) on the Engine or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (7) it has possession of the chattel paper original counterpart of the Original Lease, Lease Amendment No. 1 and the Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 2, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the - 26 - 30 due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 2, the Original Indenture, the Indenture, the Original Lease, Lease Amendment No. 1, the Lease, the Equipment Notes, or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval - 27 - 31 or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States of America governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of - 28 - 32 Delaware or any political subdivision thereof in connection with the prepayment of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; and (10) both its chief executive office, and the place where its records concerning the Engine and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto. (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust - 29 - 33 Supplement No. 2 have been duly authorized, executed and delivered by it; and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee - 30 - 34 other than the laws, rules or regulations relating to engine lease transactions generally); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Amended and Restated Head Lease TIA; and (5) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens). (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; - 31 - 35 (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection - 32 - 36 with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and - 33 - 37 (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument - 34 - 38 to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; - 35 - 39 (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any - 36 - 40 indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Engine free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Engine, and Permitted Liens under the Original Lease; (7) [Intentionally Omitted]; and (8) except for the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all - 37 - 41 with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Engine as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Engine and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; - 38 - 42 (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty with respect to Section 9(f)(8) shall be only for the benefit of the Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by operation of law, con- - 39 - 43 solidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Engine, the Lease, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom or permit the transfer of any of its stock in any transaction which has the practical effect of any of the foregoing; provided that, and subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Engine, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions, and Owner Participant agrees for the express benefit of each party hereto that any such transfer will comply with such conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank, trust company or other like regulated financial institution with a combined capital, surplus and undivided profits of, or a corporation with a tangible net worth of, in either case at least $60,000,000, (B) any wholly-owned subsidiary of such bank, trust company, financial institution or corporation if such bank, trust company, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and - 40 - 44 does not violate clause (viii) below; provided that if such Transferee is a subsidiary of Owner Participant, such notice may be given promptly following rather than prior to such transfer if such Transferee meets the net worth requirement set forth above on its own account without a guaranty and otherwise meets the requirements of this Section 10; (iii) [Intentionally Omitted]; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not violate any provision of ERISA or any rules or regulations thereunder; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, any Person engaged in the business of parcel transport by air or a subsidiary or an Affiliate of such an airline, a commercial air carrier, an air freight forwarder, Person engaged in the business of parcel transport by air or other similar Person; (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's - 41 - 45 guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Engine previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Amended and Restated Head Lease TIA by or against Owner Participant which have accrued or been made prior to the date of such transfer. The transferor Owner Participant shall pay the reasonable expenses of each party hereto related to any such transfer. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. SECTION 11. [Reserved]. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming - 42 - 46 by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Engine under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person lawfully claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee - 43 - 47 and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Engine or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Engine or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of the Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any - 44 - 48 such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement except in accordance with the terms thereof, provided that any such amendment, supplement or modification shall not adversely affect the Lessee, and (iii) not to terminate or revoke the Trust Agreement except in accordance with the terms thereof, provided that any such termination or revocation shall not adversely affect the Lessee. (b) Notwithstanding anything to the contrary in the Trust Agreement or Section 14(a) hereof, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30 days' prior notice thereof and (B) if, within 15 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of - 45 - 49 counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, and (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and the exclusions in the Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established - 46 - 50 trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis (subject to the exclusions set forth in Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and against any increase in Taxes borne by such Person that results from such change in situs. In no event shall any change in situs of the trust affect Original Head Lessee's rights or obligations under the Amended and Restated Head Lease TIA. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Engine as contemplated hereby. Lessee shall pay expenses on an after tax basis relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was solely at the request of the Owner Participant. - 47 - 51 SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed that Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor, shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, - 48 - 52 any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to (but excluding) the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance - 49 - 53 with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, - 50 - 54 Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, addressed to it at _____________________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford, Connecticut 06115 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. - 51 - 55 SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, the Subordination Agent and the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Hunton & Williams, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; - 52 - 56 (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, - 53 - 57 the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Engine from the lien of the Indenture and the termination of the Indenture pursuant to and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 54 - 58 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:_______________________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA I, INC. By:_______________________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:_______________________________________ Name: Title: Address: GPA House Shannon, County Clare, Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 55 - 59 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_______________________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [___________________________________] By:_______________________________________ Name: Title: Address: Telephone: Telecopier: Attention: FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 56 - 60 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 57 - 61 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. 62 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price - ------------ --------- -------- -------- --------- Class A $ 1,343,995 02-Jul-2009 6.85% $ 1,343,995 Class B $ 503,996 02-Jan-2006 6.93% $ 503,996 Class C $ 524,996 02-Jan-2004 6.86% $ 524,996 Class D $ 489,995 02-Jul-2002 8.16% $ 489,995 Class E $ 1,458,204 02-Jan-2004 10.50% $ 1,458,204
63 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 64 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E2] TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E2], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, _____________________________, a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1991 AWA-E2], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 65 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or - 2 - 66 right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, - 3 - 67 Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and - 4 - 68 remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required. 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - 5 - 69 (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; [(g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for - 6 - 70 taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and](1) (h) the Guarantor is [type of legal personality] with a [combined capital, surplus and undivided profits] [tangible net worth] of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to - -------- 1 This representation is not applicable if Transferee is a wholly-owned subsidiary of the Owner Participant. - 7 - 71 affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 72 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 73 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E2] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E2] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, _______________________________, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 74 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and - 2 - 75 compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it without a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) [Intentionally Omitted]; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a [combined capital, surplus and undivided profits] [tangible net worth] of not less than $60,000,000. 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. - 3 - 76 IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:___________________________________ Title: [ASSIGNEE] By:___________________________________ Title: - 4 - 77 EXHIBIT C to REFUNDING AGREEMENT [INTENTIONALLY OMITTED] 78 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 79 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E2] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1991 AWA-E2] dated November 26, 1996 (the "Indenture Supplement"), with respect to the Engine, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (b) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as assignee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (c) Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease, with Lease Supplement [GPA 1991 AWA-E2] No. 2 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Engine, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. Trust Agreement Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee, and __________________________, as owner participant, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E2] No. 1 dated March 27, 1991, which were not filed with the FAA. Original Indenture 80 Trust Indenture and Security Agreement [GPA 1991 AWA- E2] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), as indenture trustee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. L62815, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Trust Indenture Supplement No. 1 03/27/91 03/28/91 L62815 Amendment No. 1 to Trust Indenture and Security Agreement 03/27/92 04/29/92 DD002563 Amendment No. 2 to Trust Indenture and as of Security Agreement 07/29/93 08/06/93 F59679
Original Head Lease Engine Lease Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as lessor, and GPA Leasing USA I, Inc., as lessee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. L62816, as supplemented by the following described instrument:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Lease Supplement [GPA 1991 AWA-E2] No. 1 03/27/91 03/28/91 L62816
Sublease Engine Sublease Agreement [GPA 1990 AWA-E2] dated as of December 12, 1990 between GPA Leasing USA I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on February 19, 1991 and assigned Conveyance No. AA46490, as supplemented and amended by the following described instruments: - 2 - 81
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Sublease Supplement No. 1 02/08/91 02/19/91 AA46490 Amendment No. 1 to Engine Sublease Agreement [GPA 1990 as of AWA-E2] 08/26/91 09/11/91 J68136
Sublease Collateral Assignment Assignment of Sublease [GPA 1991 AWA-E2] dated as of March 15, 1991 between GPA Leasing USA I, Inc., as assignor, and Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as supplemented, as assignee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. L62818. - 3 - EX-4.21 22 FORM OF REFUNDING AGREEMENT [GPA 1991 AWA-E3] 1 Exhibit 4.21 REFUNDING AGREEMENT [GPA 1991 AWA-E3] Dated as of November 20, 1996 among AMERICA WEST AIRLINES, INC., as Lessee GPA LEASING USA I, INC., as Original Head Lessee GPA GROUP plc, as Parent Guarantor WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Pass Through Trustee under each of the Pass Through Trust Agreements ----------------------------------, as Owner Participant FLEET NATIONAL BANK, as Subordination Agent and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee Secured Equipment Notes Covering One IAE International Aero Engines AG V2500-A1 Engine Manufacturer's Serial No. V0019 Leased by America West Airlines, Inc. 2 TABLE OF CONTENTS PAGE SECTION 1. Purchase of Equipment Notes; Refunding....................... 5 SECTION 2. Equipment Notes.............................................. 7 SECTION 3. Conditions Precedent......................................... 7 SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee........................................... 15 SECTION 5. Amendment and Restatement of the Original Indenture................................ 18 SECTION 6. Amendment and Restatement of the Original Lease.................................... 19 SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc............................................... 19 SECTION 8. Representations and Warranties of the Lessee............................................ 19 SECTION 9. Representations and Warranties............................... 24 SECTION 10. Transfer of Owner Participant's Interest.......................................... 39 SECTION 11. [Reserved] .................................................. 42 SECTION 12. Quiet Enjoyment.............................................. 42 SECTION 13. Liens .................................................. 43 SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant............................. 45 SECTION 15. Certain Retained Rights and Releases......................... 48 - i - 3 PAGE SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee............. 50 SECTION 17. Lessee Protection of Title................................... 50 SECTION 18. Jurisdictional and Related Matters........................... 50 SECTION 19. Limitation on Recourse....................................... 51 SECTION 20. Notices...................................................... 52 SECTION 21. Expenses..................................................... 52 SECTION 22. Reliance of Liquidity Provider............................... 53 SECTION 23. Miscellaneous................................................ 53 SECTION 24. Governing Law................................................ 54 SECTION 25. Effectiveness................................................ 54 Schedules Schedule I Pass Through Trust Agreements Schedule II Equipment Notes, Pass Through Trusts and Purchase Price Schedule III Holders of Equipment Notes - Payment Instructions Exhibits Exhibit A Form of Transferee's Parent Guarantee Exhibit B Form of Assignment and Assumption Agreement Exhibit C List of Countries Exhibit D Form of Insurance Broker's Report Annex Annex A FAA Documents - ii - 4 REFUNDING AGREEMENT [GPA 1991 AWA-E3] REFUNDING AGREEMENT [GPA 1991 AWA-E3] (this "Agreement"), dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Lessee"), (ii) GPA LEASING USA I, INC., a Connecticut corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public limited company (the "Parent Guarantor"), (iv) ___________________________, a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"), not in its individual capacity except as otherwise expressly provided herein, but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as pass through trustee (in such capacity, the "Pass Through Trustee") under each of the five separate Pass Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "Subordination Agent") under the Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Indenture (whether set forth therein or by reference to another document) as if the Restatement Date had occurred. W I T N E S S E T H: WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner Participant, Sanwa International PLC, as Lender (and predecessor in interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and the Indenture Trustee entered into the Participation Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement"), providing for the financing of one IAE International Aero Engines AG V2500-A1 Engine (the "Engine"); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the 5 Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 to Trust Indenture and Security Agreement dated March 27, 1992, and as further amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29, 1993 (as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued loan certificates substantially in the form set forth in Section 2.02 thereof (the "Original Certificates") to the Lenders as evidence of the indebtedness then being made by the Owner Trustee to finance a portion of the purchase price of the Engine; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Trustee and the Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991 AWA-E3] No. 1 dated March 27, 1991 (as so supplemented, the "Original Lease"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Original Head Lessee, and the Original Head Lessee agreed to lease from the Owner Trustee, the Engine commencing on the Delivery Date (as therein defined); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Parent Guarantor entered into the Parent Head Lease Guaranty [GPA 1991 AWA-E3] dated as of March 15, 1991 (the "Parent Head Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent Guarantor guaranteed all of the obligations of the Original Head Lessee under the Operative Documents (as defined in the Participation Agreement); WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Trust Company entered into the Trust Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E3] No. 1 dated March 27, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Participation Agreement, the Owner Participant and the Original Head Lessee entered into the Head Lease Tax Indemnification Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Head Lease TIA"); - 2 - 6 WHEREAS, prior to the execution and delivery of the Participation Agreement, the Original Head Lessee in its capacity as sublessor (in such capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as sublessee (in such capacity, the "Sublessee") entered into the Engine Sublease Agreement [GPA 1990 AWA-E3] dated as of December 12, 1990, as supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-E3] dated February 8, 1991, as amended by Amendment No. 1 to Engine Sublease Agreement [GPA 1990 AWA-E3] dated as of August 26, 1991 (as amended, supplemented or otherwise modified to the date hereof, the "Sublease"), whereby, subject to the terms and conditions set forth therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Engine commencing on the Delivery Date (as defined therein); WHEREAS, concurrently with the execution and delivery of the Sublease, the Original Head Lessee and the Sublessee entered into the Sublease Tax Indemnification Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Sublease TIA"); WHEREAS, concurrently with the execution and delivery of the Sublease, the Sublessor and the Owner Trustee entered into the Assignment of Sublease [GPA 1991 AWA-E3] dated as of March 15, 1991 (as amended, modified or otherwise supplemented to the date hereof, the "Assignment of Sublease"); WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E3], dated as of the Restatement Date, as supplemented by Trust Indenture Supplement No. 2 dated the Restatement Date (the "First Amended and Restated Indenture" and, the First Amended and Restated Indenture as so amended and restated, the "Indenture"), under which Indenture the Owner Trustee will issue secured equipment notes substantially in the form set forth in Section 2.01 thereof (the "Equipment Notes") in five series, the proceeds from the issuance and sale of which will be applied in part to the prepayment in full of the Original Certificates; WHEREAS, at the Closing, the Owner Trustee, the Original Head Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement Date ("Lease Amendment No. 1") containing assignments, modifications and terminations necessary to give effect to the transactions described herein and providing, inter alia, for the amendment and restatement in its entirety of the Original Lease as the Amended and Restated Lease (as so amended and restated, the "Lease"); - 3 - 7 WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into Trust Agreement Supplement [GPA 1991 AWA-E3] No. 2 ("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended and as further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the "Trust Agreement"); WHEREAS, at the Closing, the Owner Participant and the Original Head Lessee will enter into the Amended and Restated Head Lease Tax Indemnification Agreement, amending and restating the Head Lease TIA (as so amended and restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into the Amended and Restated Sublease Tax Indemnification Agreement amending and restating the Sublease TIA (as so amended and restated, the "Amended and Restated Sublease TIA"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "Pass Through Trust Agreements"), on the Restatement Date, five separate grantor trusts (collectively, the "Pass Through Trusts" and, individually, a "Pass Through Trust") will be created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale by each Pass Through Trust of pass through certificates pursuant thereto (collectively, the "Certificates"); WHEREAS, the proceeds from the issuance and sale of the Certificates by each Pass Through Trust will be applied by the Pass Through Trustee at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Equipment Notes bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the "Liquidity Provider") will enter into three revolving credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each of three Pass Through Trusts, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent will enter into the Intercreditor Agreement, dated as of the Restatement Date (the "Intercreditor Agreement"); and WHEREAS, the Equipment Notes will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; - 4 - 8 NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on November 26, 1996 or on such other date agreed to by the parties hereto (the "Restatement Date"), the following actions shall take place simultaneously: (i) (A) the Sublessee shall pay to the Sublessor as a payment of Supplemental Rent under the Sublease all accrued and unpaid Rent under the Sublease up to the Restatement Date, if any, (less any amounts for which Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee shall pay to the Owner Trustee, as a payment of Supplemental Rent under the Original Lease, an amount equal to the accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus an amount (the "Prepayment Amount") equal to all other amounts due to the holders of the Original Certificates under the Original Indenture and the other Operative Documents (as defined in the Original Indenture) payable on the Restatement Date under Section 2.12 of the Original Indenture; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Equipment Notes being issued to such Pass Through Trustee as set forth in clause (xii) below; (iii) the Owner Trustee (to the extent of proceeds received under clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit of the holders of the Original Certificates an amount equal to the aggregate principal amount of the Original Certificates outstanding on the Restatement Date, together with accrued and unpaid interest on the Original Certificates up to but not including the Restatement Date plus the Prepayment Amount; (iv) the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of principal, interest, Break Funding Cost, if any, described in clause (iii) above, owing to them on the Restatement Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) the Indenture Trustee shall receive the Original Certificates for cancellation; - 5 - 9 (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture (including Trust Indenture Supplement No. 2); (vii) the Original Head Lessee, the Sublessee, the Owner Trustee and the Indenture Trustee shall enter into Lease Amendment No. 1; (viii) the Owner Participant and the Trust Company shall enter into Trust Supplement No. 2; (ix) the Original Head Lessee and the Owner Participant shall enter into the Amended and Restated Head Lease TIA and the Sublessor and the Sublessee shall enter into the Amended and Restated Sublease TIA; (x) the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the Lessee shall enter into an agreement in form and substance reasonably satisfactory to each, inter alia, confirming the termination of certain rights which the Parent Guarantor has to "put" engines to the Lessee and the obligation of the Lessee to accept and lease such engines (the "Put Termination Agreement"); (xi) the Parent Guarantor and/or one or more of its affiliates and the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant to which the Parent Guarantor and/or one or more of its affiliates, on the one hand, and the Lessee, on the other, will indemnify each other with respect to certain information included in the Prospectus and the Registration Statement (as such terms are defined in the Underwriting Agreement) (the "Prospectus" and the "Registration Statement", respectively); and (xii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Equipment Notes of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) The closing (the "Closing") of the transactions described in this Agreement shall take place at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New - 6 - 10 York, New York 10005, on the Restatement Date, or at such other place as the parties hereto may agree. (d) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Restatement Date. (e) In order to facilitate the transactions contemplated hereby, the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the Lessee have entered into the Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and conditions hereof, the Lessee will enter into each of the Pass Through Trust Agreements. SECTION 2. Equipment Notes. The Equipment Notes shall be payable as to principal in accordance with the terms of the Indenture, and the Equipment Notes shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Equipment Notes in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Equipment Notes bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Equipment Notes shall be dated and authenticated as of the Restatement Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. Conditions Precedent. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments described in Section 1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to participate in the transactions contemplated by this Agreement on the Restatement Date are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall - 7 - 11 not be conditions precedent to the obligations of the Indenture Trustee hereunder): (a) The Owner Trustee shall have tendered the Equipment Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts of each of the following documents and the Indenture Trustee shall have received executed counterparts of items (1) through (7): (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) Trust Supplement No. 2; (4) the First Amended and Restated Indenture and Trust Indenture Supplement No. 2; (5) each of the Pass Through Trust Agreements and each Pass Through Trust Supplement set forth in Schedule I hereto; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts (as defined in the Intercreditor Agreement). (c) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of each of the Original Head Lessee, the Lessee and the Parent Guarantor as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of such Person in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; - 8 - 12 (2) a copy of the resolutions of the board of directors of each of the Original Head Lessee, the Lessee and the Parent Guarantor or the applicable committee thereof, certified by the Secretary or an Assistant Secretary of such Person, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of such Person in connection with the transactions contemplated hereby; (3) a copy of the certificate of incorporation of each of the Original Head Lessee and the Lessee, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of each of the Original Head Lessee and the Lessee, certified by the Secretary or Assistant Secretary of such Person, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a copy of the Memorandum and Articles of Association of the Parent Guarantor certified to be true and correct by the Secretary or an Assistant Secretary of the Parent Guarantor. (d) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received, in the case of (3) below, a certificate signed by an authorized officer of the Lessee and, in the case of (1) and (2) below, a certificate signed by an authorized officer of the Original Head Lessee, dated the Restatement Date, certifying that: (1) the Original Lease and the Original Indenture have each been duly recorded with the FAA pursuant to the sections of Title 49 of the United States Code relating to aviation (the "Federal Aviation Act"); (2) Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering the Engine shall have been duly filed for recordation with the FAA pursuant to the Federal Aviation Act; and (3) the representations and warranties contained herein of the Lessee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in - 9 - 13 which case such representations and warranties were correct on and as of such earlier date). (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Indenture Trustee in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary, an Assistant Secretary or other appropriate officer of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (f) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby (including, without limitation, each of - 10 - 14 the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Owner Trustee, each certified by the Secretary or an Assistant Secretary of the Owner Trustee; and (4) a certificate signed by an authorized officer of the Owner Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (g) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received the following: (1) an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver this Agreement and each of the other documents to be executed on behalf of the Owner Participant in connection with the transactions contemplated hereby (including, without limitation, each of the documents referred to herein) and as to the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Owner Participant or the applicable authority designated by the board of directors thereof, certified by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing the transactions contemplated hereby and the execution, delivery and performance of each of the documents required to be executed and delivered on behalf of the Owner Participant in connection with the transactions contemplated hereby; - 11 - 15 (3) a copy of the certificate of incorporation of the Owner Participant, certified by the Secretary of State of its state of incorporation, a copy of the by-laws of the Owner Participant, certified by the Secretary or Assistant Secretary of the Owner Participant, and a certificate or other evidence from the Secretary of State of its state of incorporation, dated as of a date reasonably near the Restatement Date, as to its due incorporation and good standing in such state; and (4) a certificate signed by an authorized representative of the Owner Participant, dated the Restatement Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date). (h) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received from the Lessee a report from Willis Corroon in substantially the form of Exhibit D attached hereto. (i) The Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the Lessee, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee, the Indenture Trustee and the Owner Participant each shall have received an opinion addressed to it from Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the Subordination Agent and the Pass Through Trustee, in each case in form and substance satisfactory to each of them. (l) The Pass Through Trustee, the Indenture Trustee and the Owner Trustee each shall have received an opinion addressed to it from (i) Hunton & Williams, special counsel - 12 - 16 for the Owner Participant and (ii) in-house counsel for the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee, the Owner Trustee and the Owner Participant shall have received an opinion from (i) White & Case, special counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in form and substance satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner Participant. (n) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York counsel for the Original Head Lessee and the Parent Guarantor, in form and substance satisfactory to each of them. (p) The Pass Through Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee each shall have received an opinion addressed to it from McCann FitzGerald, special Irish counsel for the Parent Guarantor, in form and substance satisfactory to each of them. (q) The Original Head Lessee, the Lessee, GPA Leasing USA Sub I, Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement and the Lessee shall have entered into each of the Pass Through Trust Agreements, the Certificates shall have been issued and sold pursuant to the Underwriting Agreement and the Pass Through Trust Agreements, and the Underwriters shall have transferred to the Pass Through Trustee in immediately available funds an amount equal to the aggregate purchase price of the Equipment Notes to be purchased from the Owner Trustee. (r) The Original Head Lessee and the Owner Participant shall each have executed and delivered to the other the Amended and Restated Head Lease TIA. (s) The Sublessor and the Sublessee shall each have executed and delivered to the other the Amended and Restated Sublease TIA. - 13 - 17 (t) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustee to make the payments described in Section 1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner Participant or any other party hereto to participate in the transactions contemplated by this Agreement on the Restatement Date. (u) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Restatement Date shall have been duly obtained. (v) Uniform Commercial Code financing, termination, amendment and continuation statement or statements covering all of the security interests created by or pursuant to the Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the Owner Trustee, as the case may be, and such financing, termination, amendment and continuation statement or statements or documents to the same purposes shall have been duly filed in all places necessary or advisable, and any additional Uniform Commercial Code financing, termination, amendment and continuation statements deemed advisable by the Original Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee shall have been executed and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner Trustee, as the case may be, and duly filed in all places advisable. (w) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would adversely affect the tax consequences of the transactions contemplated by this Agreement to the Owner Participant, the Owner Trustee or any of their respective Affiliates. (x) The Owner Trustee shall have received a letter of credit in the amount of $200,000 from the Lessee in the form of Exhibit D-2 to the Lease. - 14 - 18 (y) The Owner Participant shall have received any other documents and evidence as the Owner Participant or its counsel may request. Promptly following the recording of Lease Amendment No. 1, the Amended and Restated Lease (including Lease Supplement No. 2) and the First Amended and Restated Indenture (including Trust Indenture Supplement No. 2) pursuant to the Federal Aviation Act, the Original Head Lessee will cause Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and Trust Supplement No. 2. SECTION 4. Certain Conditions Precedent to the Obligations of the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with respect to the Pass Through Trustee. (a) The obligations of the Original Head Lessee and the Parent Guarantor to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver this Agreement are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) Each of the Original Head Lessee and the Parent Guarantor shall have received counterparts of the following documents executed by each of the parties thereto other than the Original Head Lessee and the Parent Guarantor: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) the Amended and Restated Head Lease TIA; (4) the Amended and Restated Sublease TIA; (5) the Put Termination Agreement; (6) the Deed of Indemnity; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Original Head Lease executed by the Owner Trustee and/or the Indenture Trustee and such other releases - 15 - 19 and terminations as it may reasonably request; and (9) that certain letter agreement dated as of the Restatement Date relating to Stipulated Loss Values with respect to the Amended and Restated Lease (the "SLV Letter Agreement"). (ii) Each of the Original Head Lessee and the Parent Guarantor shall have received originals of the following documents: (1) the incumbency certificate of the Lessee referred to in Section 3(c)(1); (2) the resolutions of the Lessee referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(i), Section 3(j), Section 3(k), Section 3(l), Section 3(m) and Section 3(n), in each case addressed to each of the Original Head Lessee and the Parent Guarantor and in form and substance satisfactory to each of them; (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to the Original Head Lessee and the Parent Guarantor and in form and substance reasonably satisfactory to each of them; and (6) the report referred to in Section 3(h) addressed to each of the Original Head Lessee and the Parent Guarantor. (iii) Each of the Original Head Lessee and the Parent Guarantor shall have received such other documents and evidence with respect to each other party hereto as each of them or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein or therein set forth. - 16 - 20 (b) The obligations of the Lessee to make the payment described in Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by this Agreement on the Restatement Date, and to execute and deliver each of the Pass Through Trust Agreements are subject to the fulfillment, prior to or on the Restatement Date, of the following conditions precedent: (i) The Lessee shall have received counterparts of the following documents executed by each of the parties thereto other than Lessee: (1) this Agreement; (2) Lease Amendment No. 1, the Amended and Restated Lease and Lease Supplement No. 2; (3) the Amended and Restated Sublease TIA; (4) the Put Termination Agreement; (5) the Deed of Indemnity; (6) the Pass Through Trust Agreements; (7) the Underwriting Agreement; (8) Uniform Commercial Code termination statements relating to the Sublease executed by the Original Head Lessee; and (9) the SLV Letter Agreement. (ii) The Lessee shall have received originals of the following documents: (1) the incumbency certificate of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(1); (2) the resolutions of the Original Head Lessee and Parent Guarantor referred to in Section 3(c)(2); (3) the documents referred to in Section 3(e), Section 3(f) and Section 3(g); (4) the opinions referred to in Section 3(j), Section 3(k), Section 3(l), Section 3(m), Section 3(n), Section 3(o) and Section 3(p), in each case addressed to Lessee and in form and substance satisfactory to Lessee; and - 17 - 21 (5) the opinions of Paul, Hastings, Janofsky & Walker LLP and Milbank, Tweed, Hadley & McCloy with respect to certain matters relating to and described in the Prospectus, in each case addressed to Lessee and in form and substance reasonably satisfactory to Lessee. (iii) The Lessee shall have received such other documents and evidence with respect to each other party hereto as Lessee or its counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement and the "Refunding Agreements" (as defined in the Registration Statement), the taking of all necessary action in connection therewith and compliance with the conditions herein and therein set forth. (c) The respective obligations of each of the Lessee, the Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Restatement Date, certifying that the representations and warranties contained herein and in the Pass Through Trust Agreements of the Pass Through Trustee are correct as of the Restatement Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. Amendment and Restatement of the Original Indenture. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the First Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the First Amended and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof, consent to such execution and delivery of the First Amended and Restated Indenture. The First - 18 - 22 Amended and Restated Indenture shall be effective as of the Restatement Date. SECTION 6. Amendment and Restatement of the Original Lease. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner Participant, by execution and delivery hereof, consent to the assignments, delegations, and releases set forth in, and to the amendment and restatement of the Original Lease effected by, and the Owner Participant requests and instructs the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery hereof, to execute and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective as of the Restatement Date. SECTION 7. Termination of the Participation Agreement; Termination of Sublease, etc. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, the Owner Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by execution and delivery hereof, agree that, with effect from and including the Restatement Date and except as otherwise provided in Section 15 hereof, the Participation Agreement shall terminate and forever be without force and effect, conferring no rights and imposing no obligations on the parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by each of the parties thereto, the Sublease and the Assignment of Sublease shall be terminated as and to the extent set forth herein and therein. Lease Amendment No. 1 shall be effective as of the Restatement Date. SECTION 8. Representations and Warranties of the Lessee. The Lessee represents and warrants, as of the Restatement Date, to the Original Head Lessee (except as to the representation and warranty contained in Section 8(i)), the Parent Guarantor (except as to the representation and warranty contained in Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own or hold under lease its properties, has, or had on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by the Lessee pursuant to the foregoing (the - 19 - 23 "Lessee Documents") and is duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on its business, operations or condition (financial or otherwise), or on its ability to perform its obligations under the Lessee Documents; (b) the Lessee is a Certificated Air Carrier, and its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code in effect in the State of Arizona) is located at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034; (c) the execution and delivery by the Lessee of the Lessee Documents and the performance of the obligations of the Lessee under the Lessee Documents have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the Lessee, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Lessee or the certificate of incorporation or by-laws of the Lessee, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract, lease or other agreement in each case having payment obligations in excess of $500,000 to which the Lessee is a party or by which it may be bound or affected; (d) neither the execution and delivery by the Lessee of the Lessee Documents nor the performance of the obligations of the Lessee under the Lessee Documents nor the consummation by the Lessee of any of the transactions contemplated by the Lessee Documents, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, or any other federal, state, local or foreign governmental authority having jurisdiction, other than those which have already been received and which the Lessee is in compliance with and (i) the registration of the Certificates under the Securities Act of 1933, as amended (the "Securities Act") and the securities laws of any state in which the Certificates may be offered for sale if the laws of such state require such action, (ii) the qualification of the Pass Through Trust Agreements under the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities - 20 - 24 having jurisdiction with respect to the Engine required to be obtained on or prior to the Restatement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Restatement Date be in full force and effect and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Restatement Date and (iv) the registrations and filings referred to in Section 8(i); (e) each Lessee Document has been duly executed and delivered by the Lessee and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each Lessee Document constitutes, or when executed will constitute, the legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally and by general principles of equity, whether considered in a proceeding at law or in equity, and except, in the case of the Lease, as may be limited by applicable laws which may affect the remedies provided in the Lease, which laws, however, do not make the remedies provided in the Lease inadequate for the practical realization of the benefits intended to be afforded thereby; (f) except as disclosed in the Prospectus, there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or regulatory commission or other governmental agency against or affecting the Lessee that are reasonably expected to materially adversely affect the ability of Lessee to enter into or perform its obligations under the Lessee Documents; (g) the Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (h) on the Restatement Date, the Trust Estate shall be free and clear of any and all Liens (other than Permitted Liens) created by or through the Lessee; (i) except for the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all with the FAA, the filing of a - 21 - 25 Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Engine as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Engine and in the Lease; (j) all obligations of the Lessee owing to the Lessor in connection with the Lease are at least pari passu with all unsecured and unsubordinated debt obligations of the Lessee; (k) no event has occurred and is continuing which constitutes a Lease Event of Default or would constitute a Lease Event of Default but for the requirement that notice be given or time lapse or both; (l) no event has occurred and is continuing which constitutes an Event of Loss (as defined in the Lease) or would constitute an Event of Loss with the lapse of time; (m) the Lessee has filed or will file, or has caused or will cause to be filed, all federal and state tax returns which are required to be filed and has paid or will pay or has caused or will cause to be paid all taxes shown to be - 22 - 26 due or payable on said returns and on any assessment received by the Lessee, to the extent such taxes have become due and payable, except for taxes and returns with respect thereto the nonpayment or nonfiling of which, either in any case or in the aggregate, could have no material adverse effect on the Lessee, its condition (financial or otherwise), business, operations or prospects, or on its ability to perform its obligations under the Lease or which are being diligently contested by the Lessee in good faith by appropriate proceedings and with appropriate reserves; (n) the financial statements together with the notes related thereto contained in the Registration Statement are complete in all material respects and fairly present the Lessee's financial condition as of September 30, 1996 and the results of its operations for the period covered in conformance with GAAP (except as otherwise noted therein and with which any such change the independent auditors of the Lessee have agreed), since September 30, 1996, there has been no material adverse change in the Lessee's business, operations, condition (financial or otherwise) or prospects which has not been disclosed in writing to the Owner Participant and the Indenture Trustee and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) on the Restatement Date, all sales, use, documentary, duties or other similar Taxes then due and for which the Lessee is responsible pursuant to the Lessee Documents, shall have been paid, other than such Taxes which are being contested by the Lessee in good faith and by appropriate proceedings (and for which the Lessee shall have established such reserves as are required under GAAP) so long as such proceedings or the non-payment of such Taxes do not involve any material danger to the sale, forfeiture or loss of the Engine; (p) the Lessee is not a "national" of any designated foreign country within the meaning of the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any regulations, interpretations or rulings issued thereunder, and the Lessee is not, and is not acting on behalf of or for the benefit of, an "Iranian Entity" within the meaning of the Iranian Assets Control Regulations of the United States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as amended, and the transactions contemplated by this Agreement are not prohibited by Executive Order 12170, the above-mentioned Iranian Assets - 23 - 27 Control Regulations or any regulations, interpretations or rulings issued under any thereof; (q) no part of the Rent or other payments made by the Lessee under the Lease or under the other Operative Documents will be made out of the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA; (r) no representation or warranty of the Lessee contained in any Lessee Document or other information in writing furnished to the Owner Participant or the Indenture Trustee by the Lessee in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Lessee (other than matters of a general economic nature) which the Lessee has not disclosed in writing to the Owner Participant or the Indenture Trustee which could impair its ability to perform its obligations under the Lessee Documents; and (s) if the Lessee were to become a debtor under the Bankruptcy Code, the Lessor as lessor of the Engine under the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to the Indenture, would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Engine. SECTION 9. Representations and Warranties. Each of the parties below represents and warrants, as of the Restatement Date, to each of the other parties to this Agreement and to the Liquidity Provider (except that the representation and warranty set forth in Section 9(f)(8) shall be a representation and warranty of the Original Head Lessee to the Lessee only) as follows: (a) The Indenture Trustee in its individual capacity (and as Indenture Trustee to the extent provided in clause (6) below) represents and warrants that: (1) the Indenture Trustee is a banking association duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the laws of the State of Connecticut and the federal laws of the United States pertaining to its banking, trust and fiduciary powers to execute and deliver each of this Agreement, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this - 24 - 28 Agreement, the Indenture and each other Operative Document to which it is a party; (2) neither the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and each other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation or any judgment or order applicable to or binding on it of any United States governmental authority or agency governing the trust powers of the Indenture Trustee; (3) this Agreement constitutes, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Indenture Trustee, either in its individual capacity or as Indenture Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Indenture Trustee, in its individual capacity or as Indenture Trustee, as the case may be, to perform its obligations under the Operative Documents to which it is a party; - 25 - 29 (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any State of Connecticut or any United States of America governmental authority or agency regulating the trust powers of the Indenture Trustee is required for the execution and delivery of, or the carrying out by, the Indenture Trustee of any of the transactions contemplated hereby or by the Indenture, Lease Amendment No. 1 or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken; (6) there are no Lenders' Liens (as defined in the Lease) on the Engine or any portion of the Trust Estate created by or through the Indenture Trustee in its individual capacity; and (7) it has possession of the chattel paper original counterpart of the Original Lease, Lease Amendment No. 1 and the Lease. (b) Each of the Trust Company (except with respect to clauses (2)(ii), (3), (6) and (8) below, which representations and warranties are made solely by the Owner Trustee) and the Owner Trustee represents and warrants that: (1) the Trust Company is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has full corporate power and authority to carry on its business as now conducted, has, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver Trust Supplement No. 2, has the corporate power and authority to carry out the terms of the Trust Agreement, and each of the Trust Company and the Owner Trustee has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant), the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Equipment Notes, Lease Amendment No. 1, the Lease and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) (i) each of the Trust Company and the Owner Trustee has duly authorized, executed and delivered the Trust Agreement and this Agreement and (assuming the - 26 - 30 due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity, (ii) the Owner Trustee has duly authorized, executed and delivered this Agreement and (assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant) this Agreement and the Trust Agreement constitute, and the Indenture and the Lease, when entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee and the Trust Company, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of Trust Supplement No. 2 by the Owner Participant, the Owner Trustee has duly authorized, and on the Restatement Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Equipment Notes pursuant to the terms and provisions hereof and of the Indenture, and each Equipment Note on the Restatement Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Equipment Note and the Indenture; (4) neither the execution and delivery by the Owner Trustee or the Trust Company, as the case may be, of this Agreement, the Original Trust Agreement, Trust Supplement No. 2, the Original Indenture, the Indenture, the Original Lease, Lease Amendment No. 1, the Lease, the Equipment Notes, or any other Operative Document to which it is a party, nor the consummation by it of any of the transactions contemplated hereby or thereby, nor the compliance by it with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval - 27 - 31 or consent of any trustees or holders of any indebtedness or obligations of it, or (B) violates or will violate its articles of association or by-laws, or contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, or results or will result in the creation of any Lien (other than as permitted under the Operative Documents) upon its property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, license or other agreement or instrument to which it is a party or by which it is bound, or contravenes or will contravene any law, governmental rule or regulation of the State of Delaware or any United States governmental authority or agency governing the trust powers of the Owner Trustee, or any judgment or order applicable to or binding on it; (5) no consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any state or local governmental authority or agency or any State of Delaware or any United States of America governmental authority or agency regulating the trust powers of the Trust Company is required for the execution and delivery of, or the carrying out by, the Trust Company or the Owner Trustee, as the case may be, of any of the transactions contemplated hereby or by the Trust Agreement, the Indenture, the Lease, Lease Amendment No. 1, the Equipment Notes or any other Operative Document to which it is a party or by which it is bound, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken or which is described in Section 8(d); (6) there exists no Lessor's Lien or Head Lessor's Lien (each as defined in the Lease) (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Owner Trustee; (7) there exists no Lessor's Lien or Head Lessor's Lien (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens) attributable to the Trust Company; (8) there are no Taxes payable by the Owner Trustee or the Trust Company imposed by the State of - 28 - 32 Delaware or any political subdivision thereof in connection with the prepayment of the Original Certificates or the issuance of the Equipment Notes, or the execution and delivery by it of any of the instruments referred to in clauses (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were not located in the State of Delaware and the Trust Company had not (a) had its principal place of business in, (b) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Documents in, and (c) engaged in any activities unrelated to the transactions contemplated by the Operative Documents in, the State of Delaware; (9) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee, either in its individual capacity or as Owner Trustee, before any court or administrative agency which, if determined adversely to it, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to perform its obligations under any of the instruments referred to in clauses (1), (2), (3) and (4) above; and (10) both its chief executive office, and the place where its records concerning the Engine and all its interests in, to and under all documents relating to the Trust Estate (other than such as may be maintained and held by the Indenture Trustee pursuant to the Indenture), are located in Wilmington, Delaware. Owner Trustee, in its individual capacity or as Owner Trustee, agrees that it will not change the location of such office to a location outside of Delaware, without prior written notice to all parties hereto. (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA; this Agreement, the SLV Letter Agreement and Trust - 29 - 33 Supplement No. 2 have been duly authorized, executed and delivered by it; and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement, the Trust Agreement, the SLV Letter Agreement and the Amended and Restated Head Lease TIA constitute the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the Trust Agreement, the SLV Letter Agreement, the Amended and Restated Head Lease TIA or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Owner Participant (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any indenture, mortgage, contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the Trust Agreement and the Amended and Restated Head Lease TIA (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner Trustee - 30 - 34 other than the laws, rules or regulations relating to engine lease transactions generally); (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Trust Agreement, the SLV Letter Agreement or the Amended and Restated Head Lease TIA; and (5) on the Restatement Date, the Trust Estate shall be free of Lessor's Liens and Head Lessor's Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor's Liens but for the first proviso in the definition of Lessor's Liens). (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly organized, validly existing and in good standing under the federal laws of the United States of America, and has the full corporate power, authority and legal right under the federal laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Pass Through Trust Agreements, the Intercreditor Agreement, and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; - 31 - 35 (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, the purchase by the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, or the issuance of the Certificates pursuant to the Pass Through Trust Agreements, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Pass Through Trustee and does not contravene or result in any breach of, or constitute a default under, the Pass Through Trustee's articles of association or by-laws or any agreement or instrument to which the Pass Through Trustee is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) assuming that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code for federal income tax purposes, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the acquisition, possession or ownership by the Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and prior to the exercise of remedies upon the occurrence of an Indenture Event of Default, there are no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection - 32 - 36 with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and such trusts will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision or taxing authority thereof; upon the exercise of remedies following the occurrence of an Indenture Event of Default, there will be no Taxes payable by the Pass Through Trustee imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Pass Through Trustee of this Agreement, any of the Pass Through Trust Agreements or the Intercreditor Agreement (other than franchise or other Taxes based on or measured by any fees or compensation received by the Pass Through Trustee for services rendered in connection with the transactions contemplated by any of the Pass Through Trust Agreements), and the trusts created by the Pass Through Trust Agreements will not be subject to any Taxes imposed by the State of Connecticut or any political subdivision thereof, solely because the Pass Through Trustee maintains an office in, and administers the trusts created by the Pass Through Trust Agreements in, the State of Connecticut; (6) there are no pending or threatened actions or proceedings against the Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under this Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Equipment Notes for sale to any Person or solicited any offer to acquire any Equipment Notes from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Equipment Notes for sale to any Person, or to solicit any offer to acquire any Equipment Notes from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and - 33 - 37 (8) the Pass Through Trustee is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (e) The Subordination Agent represents and warrants that: (1) the Subordination Agent is a duly organized national banking association, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America and has the full corporate power, authority and legal right under the laws of the United States of America pertaining to its banking, trust and fiduciary powers to execute and deliver each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities and the Intercreditor Agreement, will constitute, the legal, valid and binding obligations of the Subordination Agent enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement and this Agreement or the performance by the Subordination Agent of this Agreement, contravenes any law, rule or regulation of the State of Connecticut or any United States governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers or any judgment or order applicable to or binding on the Subordination Agent and do not contravene or result in any breach of, or constitute a default under, the Subordination Agent's articles of association or by-laws or any agreement or instrument - 34 - 38 to which the Subordination Agent is a party or by which it or any of its properties may be bound; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any State of Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities) solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut, and there are no Taxes payable by the Subordination Agent imposed by the State of Connecticut or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Equipment Notes solely because the Subordination Agent maintains an office and administers its trust business in the State of Connecticut (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; - 35 - 39 (7) the Subordination Agent has not directly or indirectly offered any Equipment Note for sale to any Person or solicited any offer to acquire any Equipment Note from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Equipment Note for sale to any Person, or to solicit any offer to acquire any Equipment Note from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, the Underwriters or the Lessee. (f) The Original Head Lessee represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Connecticut and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has the corporate power and authority to enter into and to perform its obligations under this Agreement, Lease Amendment No. 1, the Amended and Restated Head Lease TIA, the Amended and Restated Sublease TIA and the SLV Letter Agreement (collectively, the "Original Head Lessee Transaction Documents"); each Original Head Lessee Transaction Document has been duly authorized, and upon the execution and delivery thereof will constitute, the legal, valid and binding obligations of the Original Head Lessee enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (2) neither (A) the execution and delivery by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Original Head Lessee, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its certificate of incorporation or by-laws or any - 36 - 40 indenture, mortgage, contract or other agreement or instrument to which the Original Head Lessee is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Original Head Lessee of this Agreement and each of the other Original Head Lessee Transaction Documents; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Original Head Lessee before any court or administrative agency or arbitrator which, if determined adversely to the Original Head Lessee, would materially adversely affect the Original Head Lessee's ability to perform its obligations under this Agreement or any other Original Head Lessee Transaction Documents; (5) on the Restatement Date, the Trust Estate, the Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); (6) on the Delivery Date, the Owner Trustee received good title to the Engine free and clear of all Liens, except the rights of the Original Head Lessee under the Original Lease, the rights of the Sublessee under the Sublease, the Lien of the Original Indenture, the beneficial interest of the Owner Participant in the Engine, and Permitted Liens under the Original Lease; (7) [Intentionally Omitted]; and (8) except for the filing for recordation pursuant to the Federal Aviation Act (with confidential financial terms redacted) of Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2, Trust Supplement No. 2, the First Amended and Restated Indenture and Indenture Supplement No. 2, and each of the other documents referred to in Annex A hereto, all - 37 - 41 with the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing statement with the Secretary of State of the State of Delaware with regard to the Original Lease, the filing of UCC termination statements with regard to the Original Head Lessee with the Secretary of State of the States of New York, Connecticut and Arizona, the filing of a protective UCC financing statement with the Secretary of State of the State of Arizona with respect to the Lease, the filing of a UCC termination statement with the Secretary of State of the State of Arizona with respect to the Sublease, and the filing of a UCC termination statement with the Secretary of State of the State of Delaware with respect to the Initial Sublease Assignment (as defined in the Original Lease) all of which financing and termination statements shall have been duly effected as of the Restatement Date (and assignments thereof and continuation statements at periodic intervals), and other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and all Lease Supplements thereto (to the extent the Lease constitutes chattel paper), and the placing of the Lease identification required by Section 6(e) of the Lease, no further filing or recording of the Lease or of any other document (including any financing statement under Article 9 of the UCC of the State of Delaware, New York or Arizona) and no further action is necessary, under the laws of the United States of America or the States of Delaware, New York and Arizona in order to perfect the Owner Trustee's interest in the Engine as against the Lessee and any third parties, or to perfect the security interest in favor of the Indenture Trustee in the Owner Trustee's interest in the Engine and in the Lease. (g) The Parent Guarantor represents and warrants that: (1) it is duly organized and validly existing under the laws of Ireland and has the corporate power and authority to enter into and to perform its obligations under this Agreement; this Agreement has been duly authorized and constitutes the legal, valid and binding obligations of the Parent Guarantor enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; - 38 - 42 (2) neither (A) the execution and delivery by the Parent Guarantor of this Agreement nor (B) compliance by it with all of the provisions hereof (x) will contravene any law or order of any court or governmental authority or agency applicable to or binding on the Parent Guarantor, or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default under, its Memorandum and Articles of Association or any indenture, mortgage, contract or other agreement or instrument to which the Parent Guarantor is a party or by which it or any of its property may be bound or affected, except where such contravention or default would not result in any liability to any other party hereto or have a material adverse effect on the rights or on the remedies of the other parties hereto or on its ability to perform its obligations hereunder or thereunder; (3) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (other than as required by the Federal Aviation Act or the regulations promulgated thereunder) is or was required, as the case may be, for the due execution, delivery or performance by the Parent Guarantor of this Agreement; (4) except as set forth in the Parent Guarantor's most recent Form 20-F filed with the Commission, there are no pending or, to its knowledge, threatened actions or proceedings against the Parent Guarantor before any court or administrative agency or arbitrator which, if determined adversely to the Parent Guarantor, would materially adversely affect the Parent Guarantor's ability to perform its obligations under this Agreement; (5) on the Restatement Date, the Trust Estate, the Engine and each Part shall be free and clear of any and all Sublessor's Liens (as defined in the Sublease); and (6) The representations and warranties of the Original Head Lessee contained in this Agreement are true and correct in all respects on the date made (provided that the representation and warranty with respect to Section 9(f)(8) shall be only for the benefit of the Lessee). SECTION 10. Transfer of Owner Participant's Interest. Owner Participant shall not directly or indirectly sell, assign, convey or otherwise transfer (whether by operation of law, con- - 39 - 43 solidation, merger, sale of assets or otherwise) any of its right, title or interest in and to the Trust Estate, the Engine, the Lease, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative Document or any proceeds therefrom or permit the transfer of any of its stock in any transaction which has the practical effect of any of the foregoing; provided that, and subject to the conditions set forth below, Owner Participant may transfer to a Transferee (as defined below) all (but not less than all) of its right (except for such rights accruing prior to transfer), title and interest as an entirety in and to the Trust Estate, the Engine, this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound. Each such transfer shall be subject to the following conditions, and Owner Participant agrees for the express benefit of each party hereto that any such transfer will comply with such conditions: (i) the Person to whom such transfer is to be made (a "Transferee") is either (A) a bank, trust company or other like regulated financial institution with a combined capital, surplus and undivided profits of, or a corporation with a tangible net worth of, in either case at least $60,000,000, (B) any wholly-owned subsidiary of such bank, trust company, financial institution or corporation if such bank, trust company, financial institution or corporation furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement or agreements of such bank, financial institution or corporation guaranteeing such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner Participant furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an agreement whereby Owner Participant will guarantee such subsidiary's obligations as Owner Participant contained in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which it is bound, which guarantee shall be substantially in the form attached as Exhibit A hereto; (ii) Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee shall have received at least 15 days' prior written notice of such transfer specifying the name and address of any proposed transferee and specifying the facts necessary to determine whether such proposed transferee qualifies as a "Transferee" under clause (i) above and - 40 - 44 does not violate clause (viii) below; provided that if such Transferee is a subsidiary of Owner Participant, such notice may be given promptly following rather than prior to such transfer if such Transferee meets the net worth requirement set forth above on its own account without a guaranty and otherwise meets the requirements of this Section 10; (iii) [Intentionally Omitted]; (iv) such Transferee has the requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby; (v) such Transferee enters into an agreement in substantially the form attached as Exhibit B hereto whereby such Transferee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and in which the transferee shall agree to be bound by and undertake the obligations of Owner Participant in the Operative Documents and shall make representations and warranties comparable to those of Owner Participant contained herein; (vi) such transfer does not violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or create a relationship that would be in violation thereof, or violate any provisions of the Securities Act or any other applicable Federal, state or other law, rule or regulation; (vii) such transfer does not violate any provision of ERISA or any rules or regulations thereunder; (viii) such Transferee is not an airline, a commercial air carrier, an air freight forwarder, any Person engaged in the business of parcel transport by air or a subsidiary or an Affiliate of such an airline, a commercial air carrier, an air freight forwarder, Person engaged in the business of parcel transport by air or other similar Person; (ix) an opinion of counsel of the Transferee confirming the matters referred to in clauses (iv) and (vi) above (with appropriate reliance on certificates of corporate officers or public officials as to matters of fact) and confirming that the agreement referred to in clause (v) above is the legal, valid, binding and enforceable obligation of the Transferee and that the guarantee referred to in clause (i)(B) or (C) above, if any, is the legal, valid, binding and enforceable obligation of the Transferee's - 41 - 45 guarantor shall be provided, at least 3 days prior to such transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which shall be in form and substance reasonably satisfactory to each of them; and (x) the terms of the Operative Documents and the Amended and Restated Head Lease TIA shall not be altered. Upon any such transfer, except as the context otherwise requires, such Transferee shall be deemed "Owner Participant" for all purposes hereof and of the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party or by which Owner Participant is bound, and shall be deemed to have made the original participation in the Engine previously made by Owner Participant; and except as the context otherwise requires, each reference in this Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to "Owner Participant" shall thereafter be deemed to include such Transferee as provided in this Section 10. No transfer shall release Owner Participant from its obligations hereunder, under the Amended and Restated Head Lease TIA and under the other Operative Documents, except to the extent expressly assumed by the Transferee in accordance with this Section 10, provided, that notwithstanding such an assumption, in no event shall Owner Participant be released from its obligations hereunder or under any of the other Operative Documents with respect to claims under this Agreement or under the Amended and Restated Head Lease TIA by or against Owner Participant which have accrued or been made prior to the date of such transfer. The transferor Owner Participant shall pay the reasonable expenses of each party hereto related to any such transfer. Each party hereto agrees, upon the request of Owner Participant, to use reasonable efforts to cooperate at no cost or expense to it with Owner Participant in complying with its obligations under the provisions of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation shall not be subject to the indemnity in Section 13 of the Lease. SECTION 11. [Reserved]. SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture Trustee in its individual capacity and as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee and the Subordination Agent severally covenants and agrees that during the Term, so long as no Lease Event of Default shall have occurred and be continuing and the Lease shall not have been declared or deemed in default, no action shall be taken or caused to be taken by it or a Person lawfully claiming - 42 - 46 by, through or on behalf of it to interfere with the right of Lessee or any Permitted Sublessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Engine under the Lease, and all rents, revenues, profits and income therefrom, in accordance with the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, holders of any Equipment Notes, or any other Person lawfully claiming by, through or on behalf of them. SECTION 13. Liens. Each of the Trust Company, Owner Trustee and Owner Participant severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien attributable to it with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner Participant severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien attributable to it. For all purposes of this Agreement and the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the nonpayment of any Tax imposed on or measured by the net income of the Trust Estate or the trust created by the Trust Agreement that is not indemnifiable by Lessee or Original Head Lessee shall be deemed to be attributable to Owner Participant, and Owner Participant shall be responsible for all Lessor's Liens attributable to Owner Participant and Owner Trustee. Each of the Indenture Trustee, Pass Through Trustee and Subordination Agent severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Trustee's Lien (as defined below) attributable to it with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Trustee's Lien attributable to it and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee - 43 - 47 and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any such Trustee's Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee), Pass Through Trustee in its individual capacity (and not as Pass Through Trustee) or Subordination Agent in its individual capacity (and not as Subordination Agent) on or in respect of (as the case may be) the Engine or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against such Person not related to its interest in the Engine or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such Person not contemplated hereunder or under the other Operative Documents, or acts or omissions of such Person which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against such Person which are excluded from indemnification by Lessee, or (iv) Claims against such Person arising out of the voluntary or involuntary transfer by such Person of all or any portion of its interest in the Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). Each of the Original Head Lessee and Parent Guarantor jointly and severally covenants and agrees with each other party hereto that it shall not cause or permit to exist a Sublessor's Lien (as defined in the Sublease) attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect with respect to the Engine or any other portion of the Trust Estate or the Indenture Estate. Each of the Original Head Lessee and Parent Guarantor severally agrees that it will promptly, at its own expense (and without any right of indemnification or reimbursement from Lessee), take such action as may be necessary duly to discharge any such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect and to make restitution to the Trust Estate and the Indenture Estate for any diminution of the assets thereof resulting therefrom and will indemnify and hold harmless Lessee and each Indemnitee against any claims incurred or suffered by any such Person and any reduction in amounts payable out of, or diminution in the assets of, the Trust Estate or the Indenture Estate resulting from any - 44 - 48 such Sublessor's Lien attributable to it or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. In no event will Lessee be liable for any Claims resulting from, pertaining to, arising from, or related to the granting, creation or existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien or other Lien or disposition of title created by or through Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which would have constituted a Sublessor's Lien had the Sublease remained in effect. The Parent Guarantor covenants and agrees that it shall cause the Original Head Lessee to perform its obligations under this Section 13. SECTION 14. Certain Additional Provisions Relating to Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant. (a) Each of Owner Participant and Trust Company hereby agrees with Lessee and Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not to amend, supplement, or otherwise modify the Trust Agreement except in accordance with the terms thereof, provided that any such amendment, supplement or modification shall not adversely affect the Lessee, and (iii) not to terminate or revoke the Trust Agreement except in accordance with the terms thereof, provided that any such termination or revocation shall not adversely affect the Lessee. (b) Notwithstanding anything to the contrary in the Trust Agreement or Section 14(a) hereof, but subject always to the provisions of Section 14(c) hereof, Owner Participant shall not consent to or direct a change in the situs of the Trust Estate so long as a successor Owner Trustee meeting the requirements of the Trust Agreement is reasonably available at the present situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30 days' prior notice thereof and (B) if, within 15 days after notice of such a proposed change is given to Lessee and the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would have an adverse effect on the rights or obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner Participant) an opinion of - 45 - 49 counsel, which counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect that such proposed change in the situs of the Trust Estate would cause an increase in the amount for which Lessee may be required to indemnify any Person pursuant to the provisions of Section 10 of the Lease or for which Original Head Lessee is required to indemnify any Person pursuant to the provisions of the Amended and Restated Head Lease TIA, unless any and all Persons entitled to indemnification pursuant to Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA shall waive indemnification under Section 10 of the Lease or applicable provision of the Amended and Restated Head Lease TIA for any adverse tax or other consequences to it of such a change in the situs of the Trust Estate, and (C) unless Indenture Trustee receives from Owner Participant an opinion of counsel, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that such proposed change in the situs of the Trust Estate would not have an adverse effect on the validity or priority of the Lien of the Indenture and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and priority of the Lien of Indenture have been made. (c) Owner Participant agrees that if, at any time, the Trust Estate has become, or in Lessee's good faith opinion will become, subject to any Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States of America from the state in which it is then located, the situs of the trust shall be moved and Owner Participant will take whatever action may be requested by Lessee that is reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification with respect to such change of situs and request of Lessee as Original Head Lessee, Owner Participant or the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and the exclusions in the Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after notice thereof Owner Participant has not notified Lessee and provided reasonable evidence of an adverse effect on Owner Participant's rights or obligations under the Trust Agreement, (C) Indenture Trustee shall have received an opinion of counsel selected by Lessee, which counsel shall be reasonably satisfactory to Indenture Trustee, to the effect that the validity and priority of the Lien of the Indenture Estate will not be adversely affected by such action, and that such Uniform Commercial Code and FAA filings as are required to maintain the validity and the priority of the Lien of the Indenture have been made, (D) Owner Participant and Indenture Trustee shall have received an opinion or opinions of counsel selected by Owner Participant to the effect that, with customary exceptions, (I) the trust, as thus removed, shall remain a validly established - 46 - 50 trust, (II) any amendments to the Trust Agreement or the Indenture necessitated by such removal shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their terms, (III) if such removal involves the replacement of Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and substance reasonably satisfactory to Indenture Trustee and to Owner Participant covering the matters described in the opinion described in Section 3(j) hereof, and (IV) covering such other matters as Owner Participant or the Indenture Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee, Owner Participant and their respective Affiliates and Indenture Trustee against any and all reasonable and actual costs and expenses including reasonable attorneys' fees and disbursements, registration, recording or filing fees and other Taxes incurred by Owner Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee in connection with such change of situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and their respective Affiliates, and Indenture Trustee on an after tax basis (subject to the exclusions set forth in Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and against any increase in Taxes borne by such Person that results from such change in situs. In no event shall any change in situs of the trust affect Original Head Lessee's rights or obligations under the Amended and Restated Head Lease TIA. (d) Owner Trustee or any successor may resign or be removed by Owner Participant, a successor Owner Trustee may be appointed, and a corporation may become Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article X of the Trust Agreement. Owner Participant agrees promptly to appoint a successor Owner Trustee in the event that Owner Participant has actual knowledge that Owner Trustee is not in compliance with its covenants contained herein. No successor Owner Trustee shall be appointed unless Lessee and Indenture Trustee shall have given written consent thereto, which consent shall not be unreasonably withheld. Owner Participant will not instruct Owner Trustee to terminate any Operative Document or take any action thereunder in violation of the terms thereof. Owner Participant shall not transfer any interest in the Trust Estate except in compliance with Section 10 hereof and the Trust Company shall not permit Owner Trustee to engage in any business other than owning and leasing the Engine as contemplated hereby. Lessee shall pay expenses on an after tax basis relating to the resignation or, if requested by Lessee, the removal of Owner Trustee, provided that the Owner Participant shall pay expenses relating to the removal of the Owner Trustee, if such removal was solely at the request of the Owner Participant. - 47 - 51 SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and confirms that they are bound by the terminations, assignments, delegations, releases and amendments set forth in or contemplated by Lease Amendment No. 1 and the Amended and Restated Lease. (b) Each of Parent Guarantor, Original Head Lessee and Lessee agree as among themselves that the following rights, benefits, obligations and liabilities (such rights, benefits, obligations and liabilities are, collectively, the "Retained Sublease Rights and Obligations"), shall survive the termination of the Sublease: (i) Lessee, Original Head Lessee and Parent Guarantor shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination or expiration thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), (ii) all rights, benefits, obligations and liabilities under the Sublease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall remain liable to Sublessee under the Sublease for Sublessor's Liens (as therein defined); all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed that Original Head Lessee shall continue to be liable to the Sublessee as and to the extent provided hereunder for removal of Sublessor's Liens. (c) Each of the Lessee, Owner Trustee and Owner Participant agree as among themselves that the following rights, benefits, obligations and liabilities shall survive the termination of the Sublease: Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as such term is defined in the Sublease) other than Original Head Lessee and Parent Guarantor, shall retain all rights, benefits, obligations and liabilities under the Sublease, including that Sublessee shall remain liable for all of its obligations under Sections 10 and 13 of the Sublease, with respect to the period up to (but excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall retain all rights and liabilities under any provision of the Sublease which by the express terms thereof survives the termination thereof (including, without limitation, - 48 - 52 any such liability arising on or after the Restatement Date under the Sublease in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date), all of which rights, benefits, obligations and liabilities shall expressly survive the termination of the Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease are expressly made for the benefit of and shall be enforceable by each Indemnitee (as such term is defined in the Sublease). (d) Except with respect to the Sublease and the Sublease TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly understood and agreed by each of the parties hereto that the Original Head Lessee and the Parent Guarantor shall, as of the Restatement Date, have no liabilities or obligations under the "Operative Documents" (as defined in the Original Head Lease as in effect immediately prior to (but excluding) the Restatement Date and excluding the Head Lease TIA (which rights, benefits, obligations and liabilities are amended and restated as of the Restatement Date)) and are released from all such obligations and liabilities, except the Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties hereto for the removal of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner Participant agree as among themselves and for the benefit of the other "Indemnitees" (as such term is defined in the Original Head Lease) that all rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of the Participation Agreement with respect to the period up to (but excluding) the Restatement Date and under any other provision of the Participation Agreement which by the express terms thereof survives the termination thereof (including, without limitation, any such liability arising from and including the Restatement Date under the Participation Agreement in respect of the period up to (but excluding), or acts or omissions or circumstances arising prior to (but excluding), the Restatement Date) shall survive the termination of the Participation Agreement, the Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights, benefits, obligations and liabilities of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In furtherance of the foregoing, the parties hereto consent and agree that the Parent Guarantor is hereby released from any and all "Obligations" under and as defined in the Parent Head Lease Guaranty, except in respect of the Retained Head Lease Rights and Obligations and except in respect of the Amended and Restated Head Lease TIA, the "Obligations" in respect of which shall continue in full force and effect in accordance - 49 - 53 with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the Parent Guarantor. SECTION 16. Certain Additional Obligations of the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for the benefit of each other that it will be bound by the terms of the other Operative Documents to which it or its applicable trustee is a party, and comply with and perform its agreements, covenants and indemnities set forth in the other Operative Documents to which it or its applicable trustee is a party, as amended, supplemented or otherwise modified from time to time as permitted hereby. SECTION 17. Lessee Protection of Title. Each of the Owner Trustee and the Indenture Trustee agrees to execute and deliver such documents or other instruments as the Lessee may reasonably request to enable the Lessee to perform its obligations under Section 15 of the Lease for the benefit of such Person. SECTION 18. Jurisdictional and Related Matters. (a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee (i) hereby irrevocably submits for itself and its property to the nonexclusive jurisdiction of the courts of the State of New York in New York County, and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any immunity (including, without limitation, sovereign immunity), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement, the Lease or any other Operative Document or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts. (b) Service of Process. Lessee generally consents to service of process by registered mail, return receipt requested, addressed to it at 4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as from time to time may be designated by Lessee in writing to Owner Trustee, Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby appoints Paul, Hastings, Janofsky & Walker LLP, - 50 - 54 Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for service of process, and covenants and agrees that service of process in any suit, action or proceeding may be made upon it at the office of such agent or such other office of Parent Guarantor or such other agent, as from time to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as from time to time may be designated by Original Head Lessee in writing to Owner Trustee, Owner Participant and Indenture Trustee. Owner Participant generally consents to service of process by registered mail, return receipt requested, addressed to it at ___________________________________ or such other office of Owner Participant as from time to time may be designated by Owner Participant in writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from time to time may be designated by Owner Trustee in writing to Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to service of process by registered mail, return receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford, Connecticut 06115 or such other office of Indenture Trustee as from time to time may be designated in writing to Owner Participant, Original Head Lessee, Owner Trustee and Lessee. (c) Judgments. A final judgment (the enforcement of which has not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court of the State of New York in New York County or in the United States District Court for the Southern District of New York shall be conclusive, and, to the extent permitted by applicable law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings against, Lessee or any of its assets in the courts of any country or place where Lessee or such assets may be found. SECTION 19. Limitation on Recourse. The provisions of Section 2.03(a) of the Indenture are hereby incorporated herein by reference mutatis mutandis as fully and with the same force and effect as if set forth in full. - 51 - 55 SECTION 20. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and shall be sent to the Original Head Lessee, the Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement and any such notice shall become effective when received. SECTION 21. Expenses. (a) Subject to receipt by the Original Head Lessee of invoices therefor in reasonable detail prior to the Restatement Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the Original Certificate Holders in connection with the transactions contemplated by this Agreement, the other Operative Documents, the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement (except, in each case, as otherwise provided therein) shall be paid on or prior to the Closing by the Original Head Lessee, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP, special counsel for the Pass Through Trustee, the Subordination Agent and the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for the Underwriters; (2) the reasonable fees, expenses and disbursements of Hunton & Williams, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the Subordination Agent; - 52 - 56 (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States of America; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 21 and the agreements referred to herein are not consummated, the Original Head Lessee shall bear and pay all costs, expenses and fees referred to in this Section 21. (c) The Lessee agrees to pay the amounts it is obligated to pay under Section 21(j) of the Lease. SECTION 22. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that the Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that the Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to the Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. SECTION 23. Miscellaneous. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations and warranties herein of the Original Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee shall survive the execution and delivery of this Agreement. This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by each party hereto; and no such termination, amendment, supplement, waiver or modification shall be effective unless a signed copy thereof shall have been delivered to each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Original Head Lessee and its successors and permitted assigns, the Parent Guarantor and its successors and permitted assigns, - 53 - 57 the Lessee and its successors and permitted assigns, the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant and its successors and permitted assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a successor or assign of any holder of the Original Certificates. (b) Upon the release of the Engine from the lien of the Indenture and the termination of the Indenture pursuant to and in accordance with Section 10.01 thereof, each requirement in the Operative Documents that the consent of Indenture Trustee be obtained or that the Indenture Trustee be given notice shall be of no further force and effect. (c) The Lessee agrees for the express benefit of the Indenture Trustee to perform its obligations under Section 8(k) of the Lease. (d) The parties hereto agree for the benefit of the Lessee that the Lessee can rely on the options, elections, determinations, consents, approvals, waivers and notices given, exercised or made by the Owner Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of the Indenture. (e) Notwithstanding anything to the contrary in any Operative Document, the parties hereto hereby agree that the Put Termination Agreement and the Deed of Indemnity (as such terms are defined herein) shall not constitute Operative Documents or Financing Documents. SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. SECTION 25. Effectiveness. The parties hereto agree that this Agreement shall be effective among all such parties on and as of the Restatement Date. - 54 - 58 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. AMERICA WEST AIRLINES, INC. By:_______________________________________ Name: Title: Address: 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Telex: 755089 (Answerback: AMERWEST) Telephone: (602) 693-5785 Telecopier: (602) 693-5904 Attention: Senior Vice President - Legal Affairs GPA LEASING USA I, INC. By:_______________________________________ Name: Title: Address: c/o GPA Corporation 83 Wooster Heights Road Danbury, Connecticut 06810 Telephone: (203) 830-4760 Telecopier: (203) 830-4764 Attention: Company Secretary GPA GROUP plc By:_______________________________________ Name: Title: Address: GPA House Shannon, County Clare, Ireland Telephone: 011-353-61360-051 Telecopier: 011-353-61360-000 Attention: Company Secretary - 55 - 59 WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_______________________________________ Name: Title: Address: Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-0001 Telephone: (302) 651-1000 Telecopier: (302) 651-8882 Attention: Corporate Trust Administration [_____________________________________] By:_______________________________________ Name: Title: Address: Telephone: Telecopier: Attention: FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 56 - 60 FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration FLEET NATIONAL BANK, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By:_______________________________________ Name: Title: Address: 777 Main Street CTMO 0238 Hartford, Connecticut 06115 Telephone: (860) 986-4545 Telecopier: (860) 986-7920 Attention: Corporate Trust Administration - 57 - 61 SCHEDULE I to Refunding Agreement PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc. and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. 62 SCHEDULE II to Refunding Agreement EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Pass Through Principal Maturity Interest Purchase Trusts Amount Date Rate Price - ------------ --------- -------- -------- -------- Class A $ 1,343,995 02-Jul-2009 6.85% $ 1,343,995 Class B $ 503,996 02-Jan-2006 6.93% $ 503,996 Class C $ 524,996 02-Jan-2004 6.86% $ 524,996 Class D $ 489,995 02-Jul-2002 8.16% $ 489,995 Class E $ 1,458,204 02-Jan-2004 10.50% $ 1,458,204
63 SCHEDULE III to Refunding Agreement HOLDERS OF EQUIPMENT NOTES Payment Instructions Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290. 64 EXHIBIT A to REFUNDING AGREEMENT TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E3] TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E3], dated as of ____________ by _________________, a ________________________ corporation ("Guarantor") to and for the benefit of Indenture Trustee (individually and as trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the Refunding Agreement described below (collectively, together with their permitted successors and assigns, "Beneficiaries" and, individually, a "Beneficiary"). WITNESSETH: WHEREAS, _________________________________, a Delaware corporation ("Transferor"), is the Owner Participant under that certain Refunding Agreement [GPA 1991 AWA-E3], dated as of November 20, 1996 among Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"); WHEREAS, Transferor wishes to transfer, except to the extent expressly reserved to Transferor, all of its right, title and interest in and to the Refunding Agreement, the Trust Estate, the other Operative Documents to which Transferor is a party, certain other agreements, instruments and documents in its capacity as Owner Participant under the Refunding Agreement and all proceeds therefrom as set forth in the Assignment and Assumption Agreement dated the date hereof between Transferor and _____________________, a ________________________ corporation ("Transferee"); and WHEREAS, the terms of the Refunding Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by Guarantor; NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Refunding Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. (a) Guarantor hereby unconditionally and irrevocably guarantees to Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by Transferee when due (whether at the stated maturity, 65 by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of Transferee under the Refunding Agreement, the Amended and Restated Head Lease TIA and each other Operative Document to which Owner Participant is a party and each other Operative Document to which Transferee is a party or by which either is bound (collectively, the "Relevant Documents"), strictly in accordance with the terms thereof and the timely performance of all other obligations of Transferee thereunder (such payment and other obligations, the "Obligations"), and Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) that may be paid or incurred by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. (b) No payment or payments made by Transferee, Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from Transferee, Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder until the Obligations are paid and performed in full. (c) If for any reason any Obligation to be performed or observed by Transferee (whether affirmative or negative in character) shall not be observed or performed, or if any amount payable by Transferee referred to in Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor shall promptly perform or observe or cause to be performed or observed each such Obligation or undertaking and shall forthwith pay such amount at the place and to the person or entity entitled thereto pursuant to the Relevant Documents regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Transferee or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Relevant Documents or at law or in equity, or otherwise, and regardless of any other condition or contingency. 3. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any setoff or application of funds of Guarantor by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of any Beneficiary against Transferee or any collateral, security or guarantee or - 2 - 66 right of set-off held by any Beneficiary for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payments made by Guarantor hereunder, until all amounts and performance owing to Beneficiaries by Transferee on account of the Obligations are paid and performed in full. 4. Amendments, etc., with respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Relevant Document and/or any collateral security document or other guarantee or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No beneficiary shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Transferee or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Transferee or any such other guarantor or any release of the Transferee or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For purposes hereof, "demand" shall include the commencement and continuance of any legal proceedings. The Guarantor represents and warrants that it owns, directly or indirectly, at least the portion of the capital stock of the Transferee required by the Refunding Agreement and that, except as otherwise provided in Section 5 hereof, its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, such portion of the capital stock of the Transferee. 5. Transfer of Interest in Transferee. Guarantor shall not assign, convey or otherwise transfer to any person (a) any of its interest in Transferee unless in connection therewith, - 3 - 67 Guarantor assigns its rights and obligations hereunder to a guarantor which meets the requirements of Section 10 of the Refunding Agreement; provided that nothing contained in this Section 5 shall be construed to prohibit any merger, consolidation or other corporate restructuring of Transferee or Guarantor so long as the resulting corporation meets the requirements of Section 10 of the Refunding Agreement and assumes the obligations of the corporation merged or consolidated into. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Transferee or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not merely of collectibility) without regard to (a) the validity, regularity or enforceability of any Relevant Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Transferee against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Transferee or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Transferee for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Transferee or any other person or entity or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Transferee or any such other person or entity or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Transferee or any such other person or entity or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and - 4 - 68 remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, endorsees, transferees and assigns, until all of the Obligations and the Obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full. The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Transferee under any Operative Document, such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor, upon demand therefor, the sums that would have otherwise been due from the Transferee had such remedies been able to be exercised. 7. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Transferee or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Transferee or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Transferee. 8. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. If any payment hereunder is subject to deduction or withholding, Guarantor shall pay an additional amount such that, after deduction of all amounts required to be deducted or withheld, the net amount actually received will equal the amount that would have been received had such deduction or withholding not been required. 9. Representations and Warranties. The Guarantor hereby represents and warrants that: (a) the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - 5 - 69 (b) the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally; (d) the execution, delivery and performance of this Guarantee will not violate any provision of any requirement of law or contractual obligation of the Guarantor and will not result in or require the creation or imposition of any lien on any of the properties or revenues of the Guarantor pursuant to any requirement of law or contractual obligation of the Guarantor; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; (f) no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; [(g) the balance sheet of the Guarantor as at _________________ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for - 6 - 70 taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and](1) (h) the Guarantor is [type of legal personality] with a [combined capital, surplus and undivided profits] [tangible net worth] of at least $60,000,000. 10. Severability. Any provision of this Guarantee that 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. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by Guarantor and each Beneficiary. 14. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and not to - ------------- (1) This representation is not applicable if Transferee is a wholly-owned subsidiary of the Owner Participant. - 7 - 71 affect the construction hereof or be taken into consideration in the interpretation hereof. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of Guarantor and shall inure to the benefit of Beneficiaries and their respective successors and assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, telex or telecopy and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, two days after deposit in the postal system, first class postage pre-paid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor, the address provided on the signature page hereof, and (b) in the case of any Beneficiary, the address provided for such party in the Refunding Agreement. - 8 - 72 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and the year first above written. [NAME OF GUARANTOR] By: __________________________ Title: - 9 - 73 EXHIBIT B to REFUNDING AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E3] ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E3] ("Assignment") dated as of _____________, between ______________, a ___________ corporation ("Assignor") and ________________, a __________ corporation ("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned below. WITNESSETH: WHEREAS, the parties hereto desire to effect (a) the transfer by Assignor to Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Refunding Agreement, dated as of November 20, 1996, among American West Airlines, Inc., Assignor, GPA Leasing USA I, Inc., GPA Group plc, Wilmington Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee, ______________________________, Fleet National Bank, as Subordination Agent, and Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented from time to time (the "Refunding Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as defined in the Refunding Agreement) and (b) the assumption by Assignee of the obligations of Assignor accruing thereunder; NOW, THEREFORE, it is hereby agreed as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Refunding Agreement. For purposes of this Assignment, the defined term "Operative Document" shall have the meaning ascribed thereto in the Refunding Agreement and shall be deemed to include the Amended and Restated Head Lease TIA. 2. Assignment. Assignor has sold, conveyed, assigned, transferred and set over, and does hereby sell, convey, assign, transfer and set over, unto Assignee, as of the date hereof, all of its right, title and interest in, under and with respect to the Refunding Agreement, the Trust Agreement, the Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other Operative Documents to which Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such 74 rights of Assignor as have accrued to Assignor prior to the date hereof (including specifically, but without limitation, the right to receive any amounts due or accrued to Assignor under the Trust Agreement as of a date prior to such date and the right to receive any indemnity payment pursuant to the Refunding Agreement or the Lease with respect to events occurring prior to such date). 3. Assumption. Assignee hereby undertakes all of the duties and obligations of Assignor whenever accrued (other than duties and obligations of Assignor required to be performed by it on or prior to the date hereof under the Operative Documents to which Owner Participant is a party and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound), pursuant to the Trust Agreement and any of the other Operative Documents by which Assignor is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound, and hereby confirms that it shall be deemed a party to the Trust Agreement and shall be bound by each of the other Operative Documents and each other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound as if therein named as Trustor. 4. Release of Assignor. Except for liabilities not assumed as provided in Section 3 hereof, upon the execution of this Assignment and Assumption Agreement, Assignor shall have no further duty or obligation under the Operative Documents to which Owner Participant is a party or under any of the other Operative Documents by which Assignor is bound or under any other contract, agreement, document or other instrument relating to the Trust Estate to which Assignor is a party or by which it is bound; provided, however, that Assignor shall in no event be released from any obligation under the Operative Documents with respect to Claims or other claims thereunder by or against Assignor which have accrued or been made prior to the date of transfer. 5. Appointment as Attorney-in-Fact. In furtherance of the within assignment, Assignor hereby constitutes and appoints Assignee, and its successors and assign, the true and lawful attorneys of Assignor, with full power of substitution, in the name of Assignee or in the name of Assignor but on behalf of and for the benefit of and at the expense of Assignee, to collect for the account of Assignee all items sold, transferred or assigned to Assignee pursuant hereto; to institute and prosecute, in the name of Assignor or otherwise, but at the expense of Assignee, all proceedings that Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and - 2 - 75 compromise at the expense of Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by Assignee; and to do all such acts and things in relation thereto at the expense of Assignee as Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by Assignor in any manner or for any reason. 6. Payments. Assignor hereby covenants and agrees to pay over to Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby covenants and agrees to pay over to Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of Assignee that, under Section 2 hereof, belong to Assignor. 7. Investment Purpose. Assignee hereby represents that it is acquiring the Trust Estate interests and other interests hereby assigned to it without a view to the distribution or resale of either thereof. 8. Representations and Warranties. Assignee represents and warrants that: (a) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the transactions of Owner Participant as contemplated by the Operative Documents; (b) [Intentionally Omitted]; (c) on and as of the date hereof, the representations and warranties of Owner Participant set forth in Section 9 of the Refunding Agreement and as set forth in any other Agreement to which Owner Participant is a party are true and correct as to Assignee; (d) it is a permitted Transferee under Section 10 of the Refunding Agreement; (e) Assignee or its guarantor has a [combined capital, surplus and undivided profits] [tangible net worth] of not less than $60,000,000. 9. Governing Law. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York. - 3 - 76 IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement as of the day and year first above written. [ASSIGNOR] By:___________________ Title: [ASSIGNEE] By:___________________ Title: - 4 - 77 EXHIBIT C to REFUNDING AGREEMENT [INTENTIONALLY OMITTED] 78 EXHIBIT D to REFUNDING AGREEMENT FORM OF INSURANCE BROKER'S REPORT [see attached] 79 ANNEX A to REFUNDING AGREEMENT FAA DOCUMENTS Documents Filed on the Restatement Date (a) First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E3] dated as of November 26, 1996 (the "Amended and Restated Indenture") between the Owner Trustee and the Indenture Trustee, amending and restating the Original Indenture with attached thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1991 AWA-E3] dated November 26, 1996 (the "Indenture Supplement"), with respect to the Engine, which Amended and Restated Indenture with the Indenture Supplement attached was filed with the FAA at 12:21 p.m., C.S.T. on November 26, 1996; (b) Assignment and Amendment No. 1 and Sublease Termination Agreement dated as of November 26, 1996 (the "Lease Amendment") among the Original Head Lessee, as assignor, the Owner Trustee, as lessor, the Lessee, as assignee, and the Indenture Trustee, which (i) assigns all right, title and interest of the Original Head Lessee in and to the Original Head Lease to the Lessee, (ii) terminates the Sublease and (iii) releases the Sublease Collateral Assignment, which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November 26, 1996; and (c) Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991 and amended and restated as of November 26, 1996 (the "Amended and Restated Lease") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, amending and restating the Original Head Lease, with Lease Supplement [GPA 1991 AWA-E3] No. 2 dated November 26, 1996 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, as successor lessee, with respect to the Engine, attached thereto, which Amended and Restated Lease with the Lease Supplement attached was filed with the FAA at 12:23 p.m., C.S.T. on November 26, 1996. Trust Agreement Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee, and ______________________, as owner participant, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E3] No. 1 dated March 27, 1991, which were not filed with the FAA. 80 Original Indenture Trust Indenture and Security Agreement [GPA 1991 AWA- E3] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), as indenture trustee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. M25990, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Trust Indenture Supplement No. 1 03/27/91 03/28/91 M25990 Amendment No. 1 to Trust Indenture and Security Agreement 03/27/92 04/30/92 DD002564 Amendment No. 2 to Trust Indenture and as of Security Agreement 07/29/93 08/11/93 F59684
Original Head Lease Engine Lease Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as lessor, and GPA Leasing USA I, Inc., as lessee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. M25991, as supplemented by the following described instrument:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- ------------- Lease Supplement [GPA 1991 AWA-E3] No. 1 03/27/91 03/28/91 M25991
Sublease Engine Sublease Agreement [GPA 1990 AWA-E3] dated as of December 12, 1990 between GPA Leasing USA I, Inc., as sublessor, and America West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation Administration on February 19, 1991 and assigned - 2 - 81 Conveyance No. AA46489, as supplemented and amended by the following described instruments:
Date of FAA FAA Instrument Instrument Recording Date Conveyance No. - ---------- ---------- -------------- -------------- Sublease Supplement No. 1 02/08/91 02/19/91 AA46489 Amendment No. 1 to Engine Sublease Agreement [GPA 1990 as of AWA-E3] 08/26/91 09/11/91 J68134
Sublease Collateral Assignment Assignment of Sublease [GPA 1991 AWA-E3] dated as of March 15, 1991 between GPA Leasing USA I, Inc., as assignor, and Wilmington Trust Company, as owner trustee under Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as supplemented, as assignee, which was recorded by the Federal Aviation Administration on March 28, 1991 and assigned Conveyance No. M25992. - 3 - EX-4.22 23 RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-5] 1 EXHIBIT 4.22 THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-5] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE UNDER A SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-5] DATED AS OF SEPTEMBER 22, 1989, AMENDED AND RESTATED AS OF OCTOBER 1, 1991, AND FURTHER AMENDED AND RESTATED AS OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF. - -------------------------------------------------------------------------------- SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-5] Dated as of September 22, 1989 Amended and Restated as of October 1, 1991 And Further Amended and Restated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as amended Lessor and AMERICA WEST AIRLINES, INC. Lessee One Airbus A320-231 Aircraft Manufacturer's Serial No. 055 U.S. Registration No. N624AW - -------------------------------------------------------------------------------- 2 SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of September 22, 1989, as amended and restated as of October 1, 1991, and as further amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as amended and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company", and "Trust Indenture Estate", shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have 3 the meanings specified in the Intercreditor Agreement (as defined in the Pass Through Trust Agreement); and the term "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or cause the direction of the management and policies of a Person whether by contract or otherwise. "Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement d'interet economique formed under the laws of the French Republic, and its successors and assigns. "Aircraft" shall mean the Airframe leased hereunder and described in Lease Supplement No. 1 (or any airframe from time to time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any Engine substituted therefor hereunder) with respect to such Airframe, whether or not any such initial or substituted Engines may from time to time no longer be installed on the Airframe or may be installed on any other airframe, (ii) Parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Aircraft Records and Documents and all other logs, manuals and records with respect to such Aircraft, and (v) all substitutions, replacements and renewals of any and all thereof. "Aircraft Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft (except Engines or engines from time to time installed thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such model aircraft (except Engines or engines from time to time installed thereon) which may from time to time be substituted for such aircraft (except Engines or engines from time to time installed thereon) pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same shall be incorporated or installed on or attached to the Airframe, or so - 2 - 4 long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from the Airframe (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor in accordance with Section 8 of the Foreign Lease Agreement); provided, however, that at such time as an aircraft (except Engines or engines from time to time installed thereon) shall be deemed part of the property leased hereunder in substitution for the Airframe pursuant to the applicable provisions hereof and the replacement Airframe shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged) and shall be subject to the Foreign Lease Agreement, the replaced Airframe shall cease to be the Airframe hereunder. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that such Aircraft, Airframe, Engine or Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Aircraft as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and - 3 - 5 location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien, Head Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section 18 in which case only Lessor shall select such appraiser (which appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Aircraft shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to Section 4(a)(i). - 4 - 6 "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 3. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Buyer Furnished Equipment" shall mean the equipment which was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar equipment furnished to Lessee. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. "Claims" shall have the meaning specified in Section 13. - 5 - 7 "Code" shall mean the Internal Revenue Code of 1986, as amended. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. "Consent and Guaranty" shall mean the Amended and Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated as of December 30, 1988, in the form attached to the Purchase Agreement. "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean September 25, 1989, being the date the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) each of the two IAE Model V2500 engines listed by manufacturer's serial number in Lease Supplement No. 1 and initially installed on the Airframe covered by such Lease Supplement, whether or not from time to time thereafter no longer installed on the Airframe or installed on any other aircraft or airframe, and (ii) any replacement engine which may from time to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c) hereof or, so long as the Foreign Lease Agreement is in effect, in accordance with Section 10(b) of the Foreign Lease Agreement), for any Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor in accordance with Section 8 of the Foreign Lease Agreement). Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. The term "Engines" - 6 - 8 means, as of any date of determination, both Engines then leased hereunder. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Aircraft, Airframe or either Engine: (a) the actual or constructive total loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days; (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted Sublessee's) business of air transportation of passengers - 7 - 9 shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing on the last day of the Term; or (h) as otherwise provided herein. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe which is a part of such Aircraft. An Event of Loss with respect to an Engine shall not, absent an Event of Loss with respect to the Airframe, be deemed an Event of Loss with respect to the Airframe. "Excluded Property" shall have the meaning set forth in Section 9(b) hereto. "Expiration Date" shall mean the date specified in Lease Supplement No. 3, on which date the Basic Term of this Lease shall expire. "FAA" shall mean the Federal Aviation Administra- tion of the United States Department of Transportation or any successor agency. "FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head Lessee to Foreign Lessee, and (iii) the Bill of Sale for the Aircraft dated the Delivery Date, from Foreign Lessee to Foreign Lessor. "Federal Aviation Act" shall mean the sections of Title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. - 8 - 10 "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Foreign Lease Documents, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass-Through Trust Agreement and each supplement thereto and any other agreement, document or certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Aircraft by the FAA. "Foreign Lease Agreement" shall mean the Japanese Lease Agreement, as defined in the Indenture. "Foreign Lease Documents" shall mean the Japanese Financing Documents, as defined in the Indenture. "Foreign Lease Supplement" shall mean the Japanese Lease Supplement, as defined in the Indenture. "Foreign Lender" shall mean the Japanese Lender, as defined in the Indenture. "Foreign Lessee" shall mean Air Tara Caymans II, Limited. "Foreign Lessor" shall mean the Japanese Lessor, as defined in the Indenture. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting - 9 - 11 Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, the Aircraft or its operations. "Head Lessor's Lien" shall mean a Lessor's Lien under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Foreign Lessor, Foreign Lessee, Foreign Lender, Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture), each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, and their respective successors and permitted assigns, and any combination thereof and their respective officers, directors, agents, servants, subcontractors, employees, subsidiaries, Affiliates, shareholders and partners. "Indenture" shall mean the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as of September 22, 1989, amended and restated as of October 1, 1991, and further amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. - 10 - 12 "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture, computed on the basis of a year of 360 days and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement No. 2, Lease Supplement No. 3 and each subsequent Lease Supplement entered into hereunder. - 11 - 13 "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989 BN-5] No. 1, dated September 25, 1989 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989 BN-5] No. 2, dated October 24, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989 BN-5] No. 3, (substantially in the form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Aircraft hereunder). "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims (as defined herein) against Indenture Trustee in its individual capacity (and not as Indenture Trustee) not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. - 12 - 14 "Lessor's Lien" shall mean any Lien or disposition of title affecting the Aircraft, the Airframe, any Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to, the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents, the Foreign Lease Documents or the Purchase Documents or not permitted without consent (which consent has not been granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer by Lessor of all or any part of their respective interest in the Aircraft, the Airframe, either Engine, the Trust Estate or the Operative Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except Liens resulting from a transfer not permitted by such Section) or 20 of this Lease or pursuant to Sections 10 and 11 of the Refunding Agreement or similar types of provisions in the Foreign Lease Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture, Lenders' Liens, or Liens contemplated by the Foreign Lease Documents. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale - 13 - 15 agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other maintenance program for the Aircraft which is approved by the aviation authority of the country of registry and complies with the requirements applicable to maintenance of the Aircraft contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Airframe, Engines, and components of the Aircraft, including, but not limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean, collectively, Manufacturer's Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be applicable in any given circumstance, together in each case with any subcontractor or supplier thereof. "Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French societe a responsabilite limitee, which as of the date hereof is owned by Airbus Industrie. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing - 14 - 16 reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, the Tax Indemnification Agreement, the Financing Documents, that certain letter agreement dated as of the Restatement Date, relating to Stipulated Loss Values with respect to this Lease, and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Aircraft Lease Agreement [GPA 1989 BN-5], with respect to the Aircraft, dated as of September 22, 1989, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification Agreement [GPA 1989 BN-5], dated as of September 22, 1989, and amended and restated as of October 1, 1991, and amended and restated as of the Restatement Date, between the Original Head Lessee and Owner Participant, as the same may be amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA I, Inc., a Connecticut corporation. "Owner Participant" shall mean _______________ ____________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. - 15 - 17 "Partial Assignment" shall mean the A320 Partial Assignment, Assumption, Release and Amendment Agreement, dated as of December 30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified. "Participation Agreement" shall mean the Participation Agreement [GPA 1989 BN-5], dated as of September 22, 1989 and amended as of October 1, 1991, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the Lenders named therein, as amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (excluding complete Engines or engines), including Buyer Furnished Equipment, which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Airframe or any Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Airframe or Engine (or so long as the Foreign Lease Agreement is in effect, Foreign Lessor in accordance with Section 8 of the Foreign Lease Agreement). Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America which has agreed (in form and substance satisfactory to Lessor) that all of its indemnity obligations which by the terms of this Lease - 16 - 18 are permitted in lieu of insurance shall be enforceable by and payable to Lessor directly or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee, which approval shall not be unreasonably withheld. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Amended and Restated Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as partially assigned to Parent pursuant to the Partial Assignment, to which Airbus Industrie, as guarantor, has consented, and as the same may from time to time be further amended, supplemented or otherwise modified to the extent permitted by the terms thereof. "Purchase Documents" shall mean the Purchase Agreement, the Partial Assignment and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Renewal Rent becomes payable. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. - 17 - 19 "Replacement Airframe" and "Replacement Engine" shall have the meanings specified in accordance with their description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. "Return Occasion" shall mean the event that occurs when possession of the Aircraft is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or - 18 - 20 before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20 (ii) (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof) except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date. In the event that it is necessary to determine a separate Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Airframe or such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth on, Exhibit A hereto. "Supplemental Agreement" shall mean the Supplemental Agreement dated as of September 22, 1989 between Foreign Lessor and Foreign Lessee (as the same may be amended, modified or supplemented from time to time). "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of the need to correct any failure of the Aircraft to satisfy the requirements of Section 16 hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) Lessor's pro rata share of any payment due to any Pass-Through Trustee in respect of fees or expenses - 19 - 21 pursuant to the Pass-Through Trust Agreement; (viii) Lessor's pro rata share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement and/or the Refunding Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate (all computations of interest under this Lease to be made on the basis of a 360-day year, as applicable, and twelve 30- day months) calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, as the case may be, not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Lessor's pro rata share" means as of any date of determination a fraction the numerator of which is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-5], dated as of September 22, 1989, as amended and restated as of October 1, 1991, and as amended and restated as of the Restatement Date, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20, the Renewal Term, for which the Aircraft is leased hereunder pursuant to Section 2. - 20 - 22 "Trust Agreement" shall mean the Trust Agreement [GPA 1989 BN-5] dated as of September 22, 1989 as amended by Trust Supplement No. 1, as further amended by Trust Supplement No. 2 and as further amended by Trust Supplement No. 3, between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include the Trust Supplements. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplements" shall mean Trust Supplement No. 1, Trust Supplement No. 2, Trust Supplement No. 3 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1989 BN-5] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1989 BN-5] No. 2 dated October 24, 1991 between Lessor and Owner Participant. "Trust Supplement No. 3" shall mean Trust Agreement Supplement [GPA 1989 BN-5] No. 3 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Aircraft or the Airframe and Engine or engines installed thereon at that time to a third party pursuant to which such Aircraft or the Airframe and Engine or engines (i) shall be operated solely by regular employees of Lessee (or any Permitted Sublessee) possessing all current certificates and licenses required under the Federal Aviation Act or, if the Aircraft is not registered under the Federal Aviation Act, all certificates and licenses required by the laws of the jurisdiction of registry (it is understood that cabin attendants need not be - 21 - 23 regular employees of Lessee (or any Permitted Sublessee)) and Lessee (or any Permitted Sublessee) otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee (or any Permitted Sublessee) in accordance with its normal maintenance practices and this Lease, and otherwise the insurance required hereunder shall be maintained and the Aircraft shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term; Rental Period. (a) Time of Delivery. The Aircraft was delivered to Lessee, and Lessee accepted delivery of the Aircraft, on December 22, 1989. (b) [Intentionally Left Blank.] (c) Acceptance of Aircraft. The Aircraft leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. (e) Rental Period. Lessor and Lessee agree that the period between each Basic Rent Payment Date shall constitute a rental period for purposes of Section 467 of the Code. Section 4. Rent; Minimum Payments. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: - 22 - 24 (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in advance and allocable to the rental period beginning on such date, as set forth on Schedule I to Exhibit C, due and payable on each Basic Rent Payment Date; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable within fifteen (15) days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Head Lessor's Lien or any Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date - 23 - 25 shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in The City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except that all Excepted Payments, and upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address in The City of New York as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft (subject to the provisions of Section 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due authorization or other - 24 - 26 infirmity of this Lease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any Permitted Sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an - 25 - 27 interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR BY ONE OF ITS AFFILIATES HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND LESSOR HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY - 26 - 28 INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: Lessor represents and warrants that (x) on the Delivery Date, Lessor had, and on the Restatement Date Lessor has, the right to lease the Aircraft hereunder, (y) on the Delivery Date the Aircraft was, and on the Restatement Date the Aircraft is, free of Lessor's Liens and Head Lessor's Liens, and (z) on the Restatement Date Lessor has such title to the Aircraft as was transferred to it on the Delivery Date and (B) Lessor covenants that it shall maintain such title to the Aircraft as was transferred to it on the Delivery Date and shall not create, incur, assume or suffer to exist any Lessor's Lien or Head Lessor's Lien on the Aircraft. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Delivery Date and as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of this Lease and the delivery of the Aircraft and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Aircraft continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise - 27 - 29 in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or airframe or propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect thereto under the Purchase Agreement (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Aircraft), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or either of the Engines or this Lease or the insurance required to be maintained hereunder and Lessee is - 28 - 30 otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject any Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that no transfer of the registration of any Engine shall be effected in connection therewith; and provided, further, that (A) no such agreement or arrangement contemplates, results in or requires the transfer of title to any Engine, and (B) if Lessor's title or Foreign Lessor's (so long as the Foreign Lease Agreement is in effect) to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and not an Event of Default and Lessee shall comply with Section 11(b) hereof in respect thereof; (2) deliver possession of the Aircraft, the Airframe or any Engine to the manufacturer thereof, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on such Aircraft, Airframe or Engine or any part thereof or for alterations or modifications in or additions to such Aircraft, Airframe or Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Aircraft or the Airframe to the United States of America or any instrumentality or agency thereof pursuant to a sublease; (4) (i) subject the Airframe to the Civil Reserve Air Fleet Program and transfer possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office - 29 - 31 Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; or (ii) subject the Airframe to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install an Engine on an airframe (other than the Airframe) owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or engines installed thereon; (6) install an Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that each Engine leased to Lessee hereby shall not become subject to the lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of such Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the owner of such Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns - 30 - 32 will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install an Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine and Lessee shall comply with Section 11(b) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in such Engine under applicable law until compliance by Lessee with such Section 11(b); (8) enter into a Wet Lease for the Aircraft or the Airframe and engines installed thereon in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee (or any Permitted Sublessee) shall enter into any Wet Lease for a period of more than one year (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given prior to entering into such Wet Lease, if practicable, but in any event promptly after entering into such Wet Lease); or (9) sublease the Aircraft or the Airframe to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section 6(a) hereof (other than the transfer of an Engine which is deemed to have been an Event of Loss) shall be expressly subject and subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of - 31 - 33 this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); and (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Aircraft or the Airframe to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered - 32 - 34 into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Aircraft in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Aircraft by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Aircraft, to the registry of the Aircraft in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction; and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in - 33 - 35 possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. The rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or constitute a waiver of Lessor's rights or remedies hereunder. Any Permitted Sublease shall expressly prohibit any further sub-sublease by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with a Foreign Air Carrier and, if practicable, not later than five days prior to entering into any Permitted Sublease with any other proposed Permitted Sublessee, but, in the case of a Permitted Sublease with a Permitted Sublessee other than a Foreign Air Carrier, in any event promptly after entering to any such Permitted Sublease) and (ii) a copy of each Permitted Sublease which has a term of more than three months. (b) Reciprocal Recognition of Rights. In the event the lessor or secured party of any airframe leased to Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or other security agreement in accordance with Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement covering such airframe also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement, Lessor hereby agrees for the benefit of such lessor or secured party that Lessor will not acquire or claim, as - 34 - 36 against such lessor or secured party, any right, title or interest in any such engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease or conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. Lessor also hereby agrees for the benefit of the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as against such mortgagee, any right, title or interest in any engine subject to the lien of such mortgage as the result of such engine being installed on the Airframe at any time while such engine is subject to the lien of such mortgage. (c) Lawful Insured Operations. Lessee will not permit the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, such of any manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the Aircraft is registered with the FAA, or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Aircraft or impair the interest of Lessor therein or impair the validity or priority of the Lien of the Indenture or result in a risk of criminal liability of Lessor or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Aircraft during the Basic Term or then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Aircraft, or suffer or permit the Aircraft to be operated by a Permitted Sublessee or - 35 - 37 otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. Lessee shall in no event permit the Aircraft, the Airframe or any Engine to be used, operated or maintained in Japan. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by Lessee without discrimination and as if Lessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by such Permitted Sublessee - 36 - 38 without discrimination and as if the Permitted Sublessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by, the central civil aviation authority of the country of registry and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such condition as is necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times under the Federal Aviation Act, or the applicable laws of any other jurisdiction in which the Aircraft may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the Aircraft at all times, at its expense, to be duly registered during the Restricted Use Period and, subject to Section 11 of the Refunding Agreement, thereafter under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as (i) while the Aircraft is registered under the Federal Aviation Act, each of the Lessor or its successors or assigns is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not register the Aircraft or permit the Aircraft to be registered under any laws other than the Federal Aviation Act at any time except as provided in Section 11 of the Refunding Agreement and shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Aircraft and this Lease at all times. At any time after the Restricted Use Period, Lessor, upon compliance with all of the terms of Section 11 of the Refunding Agreement, shall, at the request and sole expense of Lessee, cooperate with Lessee to take all actions - 37 - 39 reasonably required to change the registration of the Aircraft to another country. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") in the cockpit of the Aircraft and on each Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a location reasonably adjacent to and not less prominent than the airworthiness certificate for the Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Aircraft or either Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Airframe and Engines to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause its Permitted Sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee on reasonable prior notice at reasonable times to visit, inspect and survey the Aircraft (including, without limitation, going on board the Aircraft, and inspecting the Aircraft during maintenance checks when panels and bays are open and subject to view), its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as Lessor does not believe a Default or Event of Default has occurred hereunder inspections shall be performed during regularly scheduled maintenance checks of the Aircraft. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Aircraft. Upon - 38 - 40 Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Airframe or any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and - 39 - 41 practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Aircraft, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) within fifteen (15) days following the end of each calendar month throughout the Term, an Airframe and Engine status report, substantially in the form of Exhibit K hereto, including, without limitation, (A) a summation of hours and cycles accumulated on the Airframe and Engines by individual serial number during such preceding calendar month and (B) the identity of the airframe (including the "N" number and, at Lessor's request, ownership and lien interests in respect thereof) on which each Engine was installed as of the end of each such calendar month, and, if Lessor so requests, the location of any such airframe. The foregoing shall not be deemed to require reports regarding hours or cycles on any Parts; (vi) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; - 40 - 42 (vii) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Aircraft, either Engine or any Part with a repair or replacement cost (including labor charges) in excess of $1,000,000 or any incident required to be reported to the FAA or other Government Entity; (viii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (ix) promptly after Lessor's written request therefor, notice of the time and location of upcoming C Checks, major Engine checks, major Airframe structural checks and a description of modification of the Aircraft required by an FAA airworthiness directive, a mandatory manufacturer service bulletin or any other modification with a materials and labor cost in excess of $1,000,000; (x) together with each delivery of financial statements pursuant to Section 8(a)(ii) above, a certificate signed by Lessee's auditors thereon (i) briefly setting forth the scope of their examination (which shall include a review of this Section, (ii) stating whether or not their examination has disclosed the existence, during the fiscal year covered by such financial statements, of any Default or Event of Default and, if their examination has disclosed such a Default or Event of Default, specifying the nature and period of existence thereof, and (iii) stating that they have examined the officer's certificate delivered therewith pursuant to Section 8(a)(vi) above; (xi) As soon as possible and in any event within thirty (30) days after Lessee knows or has reason to know thereof, a certificate of a Responsible Officer specifying: (X) the occurrence or expected occurrence of any Reportable Event with respect to any Plan; or (Y) the institution of proceedings or the taking or expected taking of other action by PBGC or Lessee or any Commonly Controlled Person to terminate, withdraw or partially withdraw from any Plan and with respect to a multi-employer Plan, the reorganization or insolvency of the Plan and in addition to such notice, deliver to Lessor whichever of the following may be applicable: (A) a certificate of a Responsible Officer setting forth details as to such Reportable Event of the action that Lessee or Commonly Controlled Person proposes to take with respect thereto, together with a copy of any notice of such Reportable Event that may be - 41 - 43 required to be filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent to institute such proceedings or any notice to PBGC that such plan is to be terminated, as the case may be; and (xii) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Aircraft, the Airframe or either Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets to, or, without the prior consent of Owner Participant, acquire all or any substantial part of the property or other assets or capital stock of (if such acquisition is analogous in purpose or effect to a consolidation or merger), any corporation or other Person, unless: - 42 - 44 (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in - 43 - 45 writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Aircraft as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its federal and state income tax returns (or to permit the filing of the federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Aircraft, the Airframe or the Engines. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Aircraft, Airframe or Engines only in commercial passenger operations and related cargo operations. Unless Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the Aircraft, Airframe or Engines to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Aircraft, Airframe or Engines for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the Maximum Foreign Use Percentage. In addition, until the expiration of the Term or termination of the Foreign Lease Agreement, Lessee will not locate, use or permit the use of the Aircraft in, to or from Japan. Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft to be operated in any member state of the European Union or other European country, Lessee shall deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic - 44 - 46 control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all aircraft (including, without limitation,the Aircraft) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this Second Amended and Restated Aircraft Lease Agreement unless it had available to it the benefits of a Lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Aircraft hereunder. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Aircraft, the Airframe, any Engine or Part or the execution, delivery or performance of this Lease and the Operative Documents to which it is a party by Lessee or the enforcement thereof against Lessee. (k) Security Opinion; Annual Certificate. (i) During such times that the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with - 45 - 47 respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Aircraft is registered under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement and any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (iii) Whether the Aircraft is registered under the Federal Aviation Act or under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor annually a certificate (reasonably satisfactory to Lessor) signed by a Responsible Officer of the Lessee certifying - 46 - 48 that Lessee is in compliance with the provisions of the penultimate paragraph of Section 9(b) regarding Excluded Property and any equipment or seats which such Excluded Property replaces. (l) Letter of Credit. (X) As security for its obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on first demand by Lessor at any time, if accompanied by its statement (i) that a Default under Section 17(e), (f) or (g) or an Event of Default has occurred or (ii) that the letter of credit will expire within twenty (20) days from the date of demand, which amount may be applied, retained or utilized as provided in clause (Y); (ii) be maintained in full force and effect at all times until ninety-one (91) days after the end of the Term with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five (5) Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that a Letter of Credit in the form set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long-term unsecured debt rating at least equal to its rating on the date hereof; (iii) be expressly designated as transferable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term, then Lessor shall return the Letter of Credit to Lessee or terminate it. (Y) If an Event of Default has occurred and is continuing, in addition to any other rights or - 47 - 49 remedies Lessor may have hereunder, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to draw on the Letter of Credit and, with respect to amounts so drawn, hold same as security for Lessee's obligations under this Lease, retain same for its own account and apply (including, without limitation, by way of set off against) same, or such amounts thereof as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease), to remedy any breach by Lessee of this Lease and the other Operative Documents or to recompense Lessor for any loss, damage, cost or expense or other Claim due or owing hereunder; provided, however, that in the case of any drawing in respect of any claim for payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts ("Equity Amounts") which would (absent an Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders). If Lessor draws on the Letter of Credit because the Letter of Credit will expire within twenty (20) days from the date of demand, then Lessor may elect in its sole and absolute discretion to apply such amounts in satisfaction of any Equity Amounts which would have been or would become distributable under the Indenture to Lessor or Owner Participant if Lessee were fully to perform its obligations under the Lease on a timely basis in the inverse order of which such obligations would be distributable; and provided further, that the amount of Lessee's obligations in respect of Equity Amounts that shall be satisfied by such application shall equal (i) that amount from the proceeds of the Letter of Credit which this Lessor elects to apply (the "Applied Amount") in satisfaction of Lessee's obligations in respect of Equity Amounts (such obligations to be satisfied by application of the Applied Amount being referred to as the "Satisfied Obligations") plus (ii) an amount equal to interest at the Applicable Rate on the Applied Amount from the date of application of the Applied Amount to the date on which the Satisfied Obligations otherwise would have been due (with "Applicable Rate" meaning a per annum rate of interest computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed equal to the rate for U.S. Treasury bills with a maturity that most closely corresponds to the remaining - 48 - 50 Term, it being agreed that in no event shall the Applicable Rate exceed the lowest Debt Rate (as defined in the Indenture) provided in any Equipment Note). Lessee shall not be obligated to reinstate the amount of the Letter of Credit to the extent proceeds thereof are applied in satisfaction of Lessee's obligations in the manner provided in the immediately preceding proviso. If (a) the Lessor shall hold any proceeds of the Letter of Credit as security for Lessee's obligations to Lessor a Letter of Credit with a face amount available for drawdown in an amount equal to the amount of the proceeds so held by Lessor and otherwise meeting the requirements of this Section 8(1), Lessor shall pay such proceeds to Lessee for Lessee's own account. (m) ERISA. Lessee will not, nor will it permit any of its subsidiaries to, (a) terminate, within the meaning of Title IV of ERISA, any Plan so as to result in any material liability to the PBGC, (b) engage in any "prohibited transaction" (as defined in Section 4975 of the Code) involving any Plan that would result in material liability for an excise tax or civil penalty in connection therewith, (c) incur or suffer to exist any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, involving any Plan, or (d) allow or suffer to exist any event or condition with respect to ERISA, which would be likely to have a material adverse effect on Lessee's condition (financial or otherwise), business, operations or prospects or on Lessor's interests, rights or remedies. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, - 49 - 51 confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). All Parts which are at any time removed from the Aircraft shall remain the property of Lessor (provided that, so long as the Foreign Lease Agreement is in effect, title to such Parts shall remain with Foreign Lessor), subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Aircraft and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Aircraft as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine to the extent made mandatory for Lessee in respect of the Aircraft, Engines or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Airframe, Engines or Parts. In addition, so long as no Default or Event of - 50 - 52 Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Airframe, either Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Airframe, Engines and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Aircraft as the result of such alteration, modification or addition, shall immediately vest in Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Aircraft on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Aircraft without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Aircraft would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Aircraft (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Aircraft to Lessor - 51 - 53 hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor (provided that, so long as the Foreign Lease Agreement is in effect, title to such Parts shall remain with Foreign Lessor). If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Aircraft, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor or Foreign Lessor, as the case may be, and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Aircraft in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Aircraft as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful - 52 - 54 life and a value at least equal to that of such Part when it was removed from the Aircraft. Notwithstanding any other provision hereof, and without limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted Sublessee) may install in the Aircraft audio visual, entertainment or telephonic equipment (including seats with such equipment installed therein) (any or all of which are hereafter referred to as "Excluded Property") in the ordinary course of business, and Lessor shall not claim or acquire title thereto and the rights of the owners thereof therein shall not constitute a default hereunder; provided that (i) any such Excluded Property shall be removed prior to the date of a Return Occasion without causing any damage to the Aircraft and without diminishing or impairing the value, utility, remaining useful life or condition which the Aircraft would have had at such time had such Excluded Property not been installed, (ii) any equipment or seats which such Excluded Property replaces shall be properly stored with the interests of Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee or warehouse, and properly reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are required as a result of such removal and/or reinstallation. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Aircraft, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Airframe or either Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided the Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 9(a) may be owned by another Person subject to such - 53 - 55 a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) in accordance with Section 9(a) (and to be subjected to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture provided that this limitation on the gross-up shall be without derogation to Lessor's right to be indemnified pursuant to the remainder of this Section 10. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the - 54 - 56 application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee; provided that in any circumstance in which the Lessor is required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or otherwise, by any Federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a "Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) the Aircraft, the Airframe, any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re-registration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition - 55 - 57 of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any refinancing, modification or reissuance or any other obligation evidencing any new loan, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, any Taxes imposed by the Federal government of the United States of America upon or with respect to, based on or measured by, the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (other than Taxes included in the calculation of an after-tax payment, or Taxes in the nature of sales or use Taxes, license Taxes, value-added Taxes or property Taxes), - 56 - 58 (ii) In the case of any Indemnitee, Taxes on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any foreign, state or local government or taxing authority (other than Taxes included in the calculation of an after-tax payment, Taxes in the nature of sales Taxes, use Taxes, property Taxes, value-added Taxes or rental Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which are the direct result of gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee (other than, in the case of Owner Trustee, as a result of the occurrence of an Event of Default) or any voluntary sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (x) the transactions contemplated or effected by the Refunding Agreement and the amendments to the Lease occurring in connection therewith, (y) an Event of Default and the exercise by any Indemnitee of its remedies under the Lease or the Indenture, as the case may be, and (z) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms of the Lease; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed as a result of a transferee of such Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any Part or any interest in the Operative Documents being a foreign entity or not having its principal office in the United States, - 57 - 59 (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this Section 10 or to a failure by Lessee to satisfy its obligations related to such return, (vii) Taxes imposed on an Indemnitee as a result of a breach of its representations, warranties or covenants contained in Sections 9(a), 9(b)(11), 9(c), 9(d), 9(e), 10, 12, or 16 of the Refunding Agreement or Section 21(f) of this Agreement in any material respect or from a failure by an Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Aircraft, (ix) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents, and (x) In the case of each Pass-Through Trust, each Pass- Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts, the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust. Notwithstanding anything to the contrary contained in this Section 10, the provisions of this Section 10(b) shall not apply to, and Lessee shall hold each Indemnitee harmless against, and indemnify each Indemnitee on an after-tax basis (as provided under Section 10(e)) for, any Taxes imposed by any Taxing Authority with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, in connection with or relating to the transactions undertaken pursuant to the Japanese Financing Documents (and any other documents or - 58 - 60 agreements relating thereto unless such documents or agreements are or relate solely to Operative Documents other than the Japanese Financing Documents) including, without limitation, sales Taxes, value-added Taxes and any Taxes required to be withheld and paid over to the United States Federal government pursuant to Subtitle A of the 1986 Code or any successor provisions with respect to any amounts paid or deemed to be paid to the Japanese Lessor by any Indemnitee pursuant to the Japanese Financing Documents, but excluding any net income taxes payable to the United States Federal government or any state or local Taxing Authority as a consequence of a determination that the Lease is not a true lease for Federal income tax purposes. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) any Tax based on or measured by gross or net income, capital or net worth, franchises, excess profits or conduct of business imposed on an Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction (other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents); and (ii) a Tax imposed by any Taxing Authority other than the Federal government of the United States of America based on, or measured by gross income or receipts, to the extent such Tax is attributable to the operation or registration of the Aircraft in such jurisdiction or to the transactions contemplated by the Operative Documents or is the result of the activities of Lessee or any Affiliate of either thereof in such jurisdiction, including residence. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner - 59 - 61 Participant or its permitted assigns and send a copy of such report or return to Owner Trustee and Owner Participant or will notify Owner Trustee or Owner Participant of such requirement and make such report or return in such manner as shall be reasonably satisfactory to Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of federal income taxes imposed on Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest federal corporate income tax rate applicable to Owner Participant in the year of payment. (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (A) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (B) the actual reduction in Taxes realized by such Indemnitee as a result - 60 - 62 of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (A) above would exceed (x) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (y) the portion of all prior payments computed pursuant to (A) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. If reasonably requested by Lessee in writing, an Indemnitee shall upon receipt of an indemnity reasonably satisfactory to it and at the sole expense of - 61 - 63 Lessee (including, without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayments of estimated Taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interest) in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, that, in each such instance, such proceedings do not involve any substantial risk or danger of the sale, forfeiture or loss of the Aircraft, and provided further that the Indemnitee shall have the right to forego administrative proceedings with respect to the claim and contest the claim in an appropriate court of its choosing and provided further that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) no Event of Default has occurred and is continuing, (ii) the amount of such Taxes shall be at least $50,000, (iii) in the event an administrative proceeding is to be appealed in a judicial proceeding, as for the first level of judicial proceeding, Lessee shall have provided the Indemnitee with an opinion of legal counsel selected by the Indemnitee and reasonably acceptable to Lessee ("Tax Counsel") to the effect that a reasonable basis exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), (iv) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, Lessee shall have advanced or caused to be advanced to such Indemnitee sufficient funds (on an interest-free basis) to make such payments and shall have agreed to indemnify such Indemnitee against any adverse tax consequences of such advance, and - 62 - 64 (v) in the event a judicial decision is to be appealed, the amount of such Taxes is at least $150,000 and the Indemnitee shall have received an opinion of Tax Counsel (which opinion shall be obtained at Lessee's sole expense) to the effect that it is more likely than not that the Indemnitee will prevail, and in the event that the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of Tax Counsel, which opinion shall be obtained at Lessee's sole expense, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which such Indemnitee or Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of a statutory change in law, it is as likely as not that the position will prevail. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition - 63 - 65 of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released from its responsibility to contest such claim, or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include such affiliated group. Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Airframe. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Airframe or the Airframe and any Engines then installed thereon, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be continuing at the time of such election or at the time of replacement or if the Foreign Lease Agreement does not permit such replacement or requires the payment of additional amounts thereunder (unless Lessee in its election pays such amount due as a result thereof under the Foreign Lease Agreement): (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Airframe and such - 64 - 66 Engines then installed thereon, title to (or, so long as the Foreign Lease Agreement is in effect, beneficial ownership of) a replacement Airframe (together with the same number of replacement Engines as the Engines), such replacement Airframe and Engines (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe and replacement Engines may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and to be in at least as good operating condition as, the Airframe and the Engines, if any, so replaced (assuming the Airframe and the Engines were maintained in accordance with the requirements of this Agreement, whether or not they are in fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with equivalent or better modification status and, in the case of Engines, in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens and Head Lessor's Liens and any Lien arising out of the Foreign Lease Agreement), all of Lessor's right, title and interest, if any, in and to the Airframe and the Engines suffering the Event of Loss as well as all of Lessor's right, title and interest in and to any Engine constituting part of the Aircraft and replaced as provided above but not installed thereon at the time of the Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed part of the property leased hereunder and shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in replacement of the Airframe or Engines under this Section 11(a)(i) shall result in any reduction of Rent. (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee (but in no event later than the last day of the Term) Lessee - 65 - 67 shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens, Head Lessor's Liens and Liens arising out of the Foreign Lease Agreement), all of Lessor's right, title and interest, if any, in and to the Airframe and Engines suffering the Event of Loss, as well as all of Lessor's right, title and interest, if any, in and to any Engine constituting part of the Aircraft but not installed thereon at the time of the Event of Loss. (b) Event of Loss with Respect to an Engine. Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence (but in no event later than the last day of the Term), pay all amounts due under the Foreign Lease Agreement as a result thereof and convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to (or so long as the Foreign Lease Agreement is in effect, beneficial ownership of) another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine and is suitable for installation and use on the Airframe without diminishing the value, remaining useful life or - 66 - 68 utility of such Airframe, free of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) with a full warranty bill of sale, in form and substance reasonably satisfactory to Lessor and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect), the Foreign Lease Agreement (if then in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence of title to or, so long as the Foreign Lease Agreement is in effect, beneficial ownership of such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant, Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to or, so long as the Foreign Lease Agreement is in effect, beneficial ownership of such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens), and is duly leased hereunder and under the Foreign Lease Agreement (if in effect), and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine; (v) furnish a - 67 - 69 certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish Owner Participant, at Lessee's election; (x) an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant or (y) an indemnity for any adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens and any Lien arising out of the Foreign Lease Documents), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein and shall be deemed part of the same Aircraft as was the Engine replaced thereof. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Conveyance of Replacement Airframe. Prior to or at the time of any conveyance of a replacement Airframe pursuant to Section 11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the following documents which shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect on said date: (i) a full warranty bill of sale, in form and substance satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be - 68 - 70 approved by the FAA on said date), executed by the owner thereof, in favor of Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) and, cause supplements, reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), to this Lease, the Foreign Lease Agreement (if then in effect), the Indenture (if then in effect) and the Trust Agreement (if then in effect), with respect to such replacement Airframe and to be duly filed for recordation pursuant to the Federal Aviation Act or other applicable Governmental Entity; (ii) the certificate specified in Section 12(f) hereof demonstrating compliance with the insurance requirements of Section 12 with respect to the replacement Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such other evidence of title as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request) to the effect that, upon such conveyance, Lessor will acquire good title to, or, so long as the Foreign Lease Agreement is in effect, beneficial ownership of, such replacement Airframe free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe may be subject to Permitted Liens), that such replacement Airframe will be leased hereunder and under the Foreign Lease Agreement (if then in effect) to the same extent as the Airframe replaced thereby and will be subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and Replacement Engine and the Lien of the Indenture on such Replacement Airframe and Replacement Engine; and that Lessor and Indenture Trustee, as the assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement airframe and engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement; (iv) a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (v) such documents and - 69 - 71 evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(c), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(c), in each case in form and substance satisfactory to each such party, including evidence that the Aircraft of which the replacement Airframe is a part has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of this Lease and application for registration of such replacement Airframe in the name of Lessor has been duly made with the FAA or other applicable Governmental Entity and Lessee has temporary or permanent authority to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code financing statements covering the replacement Airframe as may be requested by Lessor or Indenture Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal prepared in accordance with the Appraisal Procedure which confirms that the replacement Airframe and any replacement Engine has a value, utility and remaining useful life at least equal to that of the Airframe and Engines which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of this Lease whether or not they are in fact so maintained; and (ix) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe is free and clear of Lessor's Liens, Head Lessor's Liens and any Lien arising out the Foreign Lease Documents), all of Lessor's right, title and interest in and to the Aircraft which suffered the Event of Loss. No Event of Loss with respect to the Aircraft under the circumstances contemplated by the terms of this Section 11(c) shall result in any reduction in Rent. For all purposes of this Lease, each such replacement Aircraft (together with any Engines constituting part of the Aircraft being replaced as to which an Event of Loss has not occurred) shall be deemed part of the property - 70 - 72 leased hereunder and shall be deemed the "Aircraft" as defined herein. (d) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other than insurance proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (e) Requisition for Use by Government with Respect to the Aircraft. Subject to Section 11(f) below, in the event of the requisition for use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other than a requisition constituting an Event of Loss), Lessee shall promptly notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) thereof and all of Lessee's obligations under this Lease with respect to such Airframe or Engine shall continue to the same extent as if such requisition had not occurred. All payments received by Lessor or Lessee from the Governmental Entity for the use of - 71 - 73 such Airframe or Engine during the Term shall be paid over to, or retained by, Lessee if no Default or Event of Default shall have occurred and be continuing; and all other payments received by Lessor or Lessee from the Governmental Entity shall be paid over to, or retained by, Lessor. If the Airframe and such Engines or engines are not returned by the end of the Term, an Event of Loss shall be deemed to have occurred on the last day of the Term and, on the last day of the Term, Lessee shall either pay to Lessor the amount provided herein for an Event of Loss to the Airframe and such Engines or engines on such date or provide a replacement Aircraft and Engine on such date in the condition provided for in Section 16. In the event of the requisition for use by the Governmental Entity of any Engine without the requisition for use of the Airframe, Lessee will replace such Engine hereunder by complying with the terms of Section 11(b) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (f) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own - 72 - 74 cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Aircraft, in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured of any breach or violation by Lessee or any other insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees or if such insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war risk and allied perils coverage), after notice to Lessor, Owner Participant, Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse provided, however, that if any - 73 - 75 such notice period is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable, (iv) shall include coverage for any country in or over which the Aircraft is located or operated, and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender or the other Indemnitees, or their respective permitted assigns, with respect to the Aircraft. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the consent of Lessee) covering the Aircraft, and "all-risk" coverage including transit insurance with respect to Engines and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and - 74 - 76 exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull insurance reasonably acceptable to Lessor with Approved Insurers if the Aircraft, Airframe or Engines are operated on routes or kept in locations outside of the United States of America. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly-sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged. Anything herein to the contrary notwithstanding, at all times while the Aircraft is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Aircraft. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Aircraft, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to - 75 - 77 pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war risks or allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse provided, however, that if any such notice period is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable, (iv) shall include coverage for any country in or over which the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, and the other Indemnitees and their respective permitted assigns, with respect to the Aircraft, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee, as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. - 76 - 78 The insurance required under this Section 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor, Owner Participant and Foreign Lessor shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor, Foreign Lessor, or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor, Foreign Lessor, or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant, Indenture Trustee and Foreign Lessor for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its payment of such Stipulated Loss Value and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid - 77 - 79 over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the - 78 - 80 Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Aircraft and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Aircraft complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war risk and allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance; provided, however, that if any such notice period is not reasonably obtainable, such Approved Broker shall provide for as long a period of prior notice as shall then be reasonably obtainable. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. - 79 - 81 (g) Reinsurance. Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris if the relevant primary insurer shall have obtained reinsurance and such reinsurance will (i) be on the same terms as the original insurance and will include the provisions required by this Agreement, (ii) provide in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contain a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5] dated as of October 1, 1991 as amended and restated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without - 80 - 82 limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for passenger aircraft of similar size as the Aircraft in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on an after-tax basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims, damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee from (and including) and after the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the - 81 - 83 Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Aircraft to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations thereunder or to file the documentation necessary to continue FAA registration of the Aircraft), delivery, non- delivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such defect shall be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or - 82 - 84 willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien or an - 83 - 85 Original Head Lessee's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, either in the air or on the ground, or which may be caused by any defect in such Aircraft, Airframe, Engine, engine or Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of the location of such Aircraft at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the - 84 - 86 Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition, (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long - 85 - 87 as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee has the right to control the defense thereof is materially prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section. Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Aircraft or of the residual value of the Aircraft. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the - 86 - 88 expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee, Foreign Lessor and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Lessor's Liens, Head Lessor's Liens and (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor, Foreign Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor, Foreign Lessor or Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor, Foreign Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of - 87 - 89 Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement, the Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft. If any filing or recording is reasonably necessary to protect the interests of Lessor, Foreign Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor or Foreign Lessor, cause any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor, Foreign Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to Lessor, Foreign Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control - 88 - 90 which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease, and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's, Foreign Lessor's and Indenture Trustee's interest in the Aircraft and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in favor of Lessor, Foreign Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor, Foreign Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture, the Foreign Lease Documents and the other Financing Documents, any replacement Aircraft or Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. - 89 - 91 Lessee's obligations under this Section 15 are subject to the reasonable cooperation of the applicable parties. Section 16. Return of Aircraft and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Aircraft to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree, fully equipped with all required Engines, or other engines owned by Lessee (which shall thereupon become Engines as hereinafter provided) meeting the conditions specified in this Section and Exhibit E, duly installed thereon by delivering the same to the Lessor at such location. Lessee shall comply with Section 11(b) and this Section 16 with respect to any engines installed on the Aircraft returned to Lessor hereunder and meeting the conditions described herein which were not originally installed on the Aircraft. (b) Status Upon Return. Upon any Return Occasion hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Original Head Lessee's Liens, Lessor's Liens, Lenders' Liens and Liens arising out of the Foreign Lease Agreement, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act and with a current and valid Airworthiness Certificate installed on the Aircraft, unless such certificate shall have been suspended or revoked as a result of the suspension or revocation of the registration of the Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft to be registered in the name of Lessor under the Federal Aviation Act (whether by means of a voting trust agreement or otherwise) in which case the Aircraft shall nevertheless meet all conditions for such certification and for the issuance of such certificate; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Aircraft to be operated under, and in full compliance with, such Airworthiness Certificate and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance - 90 - 92 with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense with respect to effecting such registration, duly registered in the name of the Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vii) in good and airworthy operating condition, and in the same condition (including, without limitation, in a passenger configuration suitable for passenger revenue service) as when delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (viii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Engines. In the event any engine not owned by Lessor shall be installed on the Aircraft on any Return Occasion, without limiting Lessee's obligations under the Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engines or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engines, assuming the Engines were in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any - 91 - 93 representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens, Liens arising out of the Foreign Lease Agreement and Head Lessor's Liens. (d) Records and Documents. Upon the return of the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Aircraft, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Aircraft and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Aircraft under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Aircraft under the Maintenance Program, in each case as Lessor may reasonably request, and all documentation with respect to the Aircraft set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Aircraft on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Aircraft, Airframe, Engines, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, - 92 - 94 accumulated cycles or flight hours as applicable and remaining service lives on a separate listing. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an aircraft which has been operating in regulated commercial air service, shall be delivered to Lessor with the Aircraft. Any documents or records required to be delivered hereunder shall be in English. (e) Condition of Aircraft. Upon any Return Occasion, (i) Lessee shall return such Aircraft to Lessor in such condition that the Aircraft shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto and (ii) shall provide that each oil tank on the Aircraft shall be full and the fuel tanks shall contain as much fuel as such tanks contained at the time the Aircraft was accepted by Lessee. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Aircraft available to Lessor at the location where the "block 'C' Check" (or equivalent level designated check or checks) required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding compensation to representatives of Lessor), in order to verify that the condition of such Aircraft complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such "block 'C' Check" (or equivalent level check or checks) and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such "block 'C' Check" is being performed and shall have such duration as to permit the opening of any areas of the Aircraft which are necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Aircraft and shall continue on consecutive days until - 93 - 95 all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(f) hereof, the Term with respect to the Aircraft undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations (including, without limitation, the obligation to pay Rent hereunder) continued, on a daily basis until the Final Inspection shall have been concluded; provided, however, that Lessee shall not be required to pay Rent with respect to the Aircraft during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Aircraft Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Aircraft. (h) Corrections and Subsequent Corrections. To the extent that the Aircraft or any Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as such Aircraft is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of such Aircraft and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of such Aircraft, at commercial rates then charged by the Person selected by Lessor to perform such correction. The Letter of Credit shall not be released and any costs and expenses (including, materials and labor) incurred by Lessor - 94 - 96 for such correction shall be indemnified by Lessee in favor of Lessor (and prior to the end of the Term, Lessee shall make adequate provision to Lessor's satisfaction in respect of such indemnity) and shall become Supplemental Rent payable by Lessee within ten (10) days following the submission of a written statement by Lessor to Lessee, identifying the items corrected and setting forth the expense of such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. (i) Functional Flight Check. Immediately prior to the expiration of the Term, Lessor will be permitted to conduct a non-commercial functional flight check flight of no more than two (2) hours duration in accordance with the Manufacturer's functional flight check procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft and proper functioning of all systems and components. A qualified pilot and up to five (5) other representatives selected by Lessor may take part in such flight to verify compliance of the Aircraft with the requirements of this Lease, provided, that Lessor shall be responsible for the charges of such qualified pilot and representatives. Lessee may combine the functional flight check provided in this Section 16(i) with the delivery flight specified in Section 16(a) and such functional flight check shall include the landing. Any discrepancy or malfunction detected during any functional flight check (including a functional flight check combined with a delivery flight) shall be corrected, at Lessee's expense, and prior to the expiration of the Term. To the extent that any actions to correct any such discrepancy or malfunction extend beyond the Term, the provisions of the first sentence of Section 16(h) shall apply. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee. (j) Export Certificate of Airworthiness. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably request to assist Lessor in obtaining any required documents in relation to the export of the Aircraft from the United States (including, without limitation, a valid and subsisting export certificate of airworthiness with respect to the Aircraft and export license) and in relation to the deregistration of the Aircraft. (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Aircraft which have not - 95 - 97 been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Aircraft for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Aircraft after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Aircraft and the records relating thereto to the extent it does not unreasonably interfere with the operation or maintenance of the Aircraft or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the date on which such payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto (provided that any failure of Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless notice is given by the Owner Participant to Lessee - 96 - 98 and the Indenture Trustee that such failure shall constitute an Event of Default); or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Aircraft outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Aircraft; or (c) Any representation or warranty made by Lessee in the Operative Documents (other than the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement and the Tax Indemnification Agreement) or in any certificate furnished by Lessee in connection therewith is incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or any other Operative Document (other than the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement, and the Tax Indemnification Agreement), and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c), or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's - 97 - 99 consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of sixty (60) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within sixty (60) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of sixty (60) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or - 98 - 100 Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act; or (j) if the existence, validity, enforceability or priority of the rights or interests of Lessor under this Lease, or the rights or ownership of Lessor of the Aircraft under this Lease in respect of the Aircraft or the rights or interests of Note Holders under the Indenture are challenged by Lessee or any Person claiming by, through or on behalf of Lessee unless Lessee demonstrates that such a claim was not rightfully made by, through or on behalf of Lessee. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to all or any part of the Airframe and any or all of the Engines as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's expense, immediately return the Aircraft to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Aircraft) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Aircraft or any Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee - 99 - 101 shall be required thereafter to take such actions as would be required by the provisions of this Lease if such Aircraft were being returned at the end of the Term hereof with respect to such Aircraft. In addition, Lessor, at its option and to the extent permitted by applicable Law, may enter upon the premises where all or any part of the Aircraft is located to take immediate possession of and, at Lessor's option, remove the same (and/or any engine which is not an Engine but which is installed on the Airframe, subject to the rights of the owner, lessor or secured party thereof) by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry or taking of possession whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. (b) Sell or cause to be sold, the Aircraft or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Aircraft, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Aircraft to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Aircraft as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for - 100 - 102 the Aircraft computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or Renewal Rent Payment Date, an amount equal to the Basic Rent or the Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Aircraft for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent for such Aircraft due to and including the date of sale, plus the amount by which the Stipulated Loss Value of such Aircraft, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the Aircraft under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Aircraft, which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for such Aircraft would have expired but for Lessee's default, discounted periodically (equal to installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (f) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Aircraft - 101 - 103 shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. (g) Proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Aircraft in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass-Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or responsible, in - 102 - 104 any manner, for any damage or injury to any of Lessee's property in repossessing and holding the Aircraft, the Airframe, an Engine or Part, except for direct damages caused by Lessor's gross negligence or willful misconduct, and (iv) shall have the right to maintain possession of and dispose of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Aircraft, the Airframe, an Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part and selling or releasing the Aircraft, the airframe, an Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Aircraft, the Airframe, an Engine or Part pursuant to this Section, Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. - 103 - 105 No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d) or (e) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Aircraft leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Aircraft, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. Section 19. Alienation. (a) Lessor Assignments. In addition, and subject, to the transactions contemplated by Section 19(b), Lessor shall not assign or transfer any interest of Lessor in this Lease and/or the Aircraft and/or the proceeds hereof to any Person except as provided herein, in the Trust Agreement, in the Indenture and in the Refunding Agreement. Any such assignment shall be subject to the condition that the transferee shall agree not to disturb the quiet enjoyment by Lessee of the Aircraft as and to the extent so agreed by Lessor in Section 21(f). (b) Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by - 104 - 106 Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and perfected security interest in all of Lessor's right, title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee hereby consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. - 105 - 107 Section 20. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Aircraft for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, an amount equal to the greater of 120% of the "fair market sales value" of the Aircraft as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to Lessor, semi-annually in advance as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. - 106 - 108 Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft or any Engine or Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Aircraft for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). Until such time as the Lien of the Indenture is discharged, all notices, reports or other documents provided - 107 - 109 to Lessor or Lessee shall be provided concurrently to Indenture Trustee at such address as Indenture Trustee may designate from time to time. All notices hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft hereunder, and all rents, revenues, profits and income therefrom, in accordance with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it and without interference from any Person making a Claim concerning payment for or the ownership of Buyer Furnished - 108 - 110 Equipment with respect to the Aircraft, provided, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. - 109 - 111 (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications thereof, or waivers or consents thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the other Operative Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft similarly situated to Lessor. (l) U.S. Registration Number. At Lessee's request, Lessor shall use its best efforts to have the Aircraft registered under the United States Registration Number designated by Lessee. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Lessee hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or of any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United States District Court for the Southern District of New York. Lessee represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, Lessee hereby, to the - 110 - 112 extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-- named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee as from time to time may be designated by Lessee in writing to Lessor or Lessee, Foreign Lessor, Owner Participant and Indenture Trustee. Lessee hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Foreign Lessor, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. - 111 - 113 Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all purposes hereof without the necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease as amended and restated by this Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5] (and as otherwise extended, amended, modified, renewed or supplemented) shall be governed by Article 2-A of the Uniform Commercial Code of New York. - 112 - 114 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by their duly authorized officers as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:__________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:___________________________ Title: - 113 - 115 TABLE OF CONTENTS Page Section 1. Definitions..................................................... 1 Section 2. Agreement to Lease.............................................. 21 Section 3. Delivery and Acceptance; Term; Rental Period................................................... 22 (a) Time of Delivery..................................................... 22 (b) [Intentionally Left Blank.].......................................... 22 (c) Acceptance of Aircraft............................................... 22 (d) Term of Lease........................................................ 22 (e) Rental Period........................................................ 22 Section 4. Rent; Minimum Payments.......................................... 22 (a) Rent................................................................. 22 (b) Minimum Payments..................................................... 23 (c) Date, Place and Method of Payment.................................... 23 (d) Prohibition Against Setoff, Counterclaim, Etc........................ 24 Section 5. Representations, Warranties and Covenants....................... 25 (a) Warranties and Disclaimer of Warranties.............................. 25 (b) Representations and Warranties of Lessor............................. 27 (c) No Amendments to Financing Documents................................. 27 (d) Suppliers' Warranties................................................ 27 Section 6. Possession and Use.............................................. 28 (a) Possession........................................................... 28 (b) Reciprocal Recognition of Rights..................................... 34 (c) Lawful Insured Operations............................................ 35 (d) Maintenance.......................................................... 36 (e) Registration and Insignia............................................ 37 Section 7. Inspection...................................................... 38 Section 8. Additional Covenants of Lessee.................................. 39 (a) Financial Information................................................ 39 (b) Maintenance of Corporate Existence................................... 41 (c) Maintenance of Status................................................ 42 (d) Payment of Taxes..................................................... 42 (e) Consolidation, Merger, Etc........................................... 42 (f) Information.......................................................... 43 (g) Place of Business.................................................... 44 (h) Certain Limitations on Use........................................... 44 (i) Section 1110......................................................... 45 (j) Permits and Licenses................................................. 45 (k) Security Opinion; Annual Certificate................................. 45 (l) Letter of Credit..................................................... 46 (m) ERISA................................................................ 48 i 116 Page Section 9. Replacement of Parts; Alterations, Modifications and Additions.................................... 49 (a) Replacement of Parts................................................. 49 (b) Alterations, Modifications and Additions............................. 50 (c) Pooling.............................................................. 53 Section 10. General Tax Indemnification.................................... 53 (a) Indemnity............................................................ 53 (b) Exclusions........................................................... 56 (c) Covered Income Tax................................................... 58 (d) Reports and Returns.................................................. 59 (e) After-Tax Basis...................................................... 59 (f) Tax Benefit.......................................................... 60 (g) Payment.............................................................. 60 (h) Contest.............................................................. 61 (i) Refund............................................................... 62 (j) Diligence............................................................ 63 (k) Affiliated Group..................................................... 63 Section 11. Loss, Damage and Requisition................................... 63 (a) Event of Loss with Respect to the Airframe........................... 63 (b) Event of Loss with Respect to an Engine.............................. 66 (c) Conveyance of Replacement Airframe................................... 68 (d) Application of Proceeds and Payments................................. 70 (e) Requisition for Use by Government with Respect to the Aircraft.............................................. 71 (f) Application in Default............................................... 71 Section 12. Insurance...................................................... 72 (a) Public Liability and Property Damage Insurance. ..................... 72 (b) Insurance Against Loss or Damage..................................... 74 (c) Application of Insurance Proceeds for an Event of Loss........................................................ 76 (d) Application of Insurance Proceeds for Other than an Event of Loss................................................ 77 (e) Application in Default............................................... 78 (f) Certificates......................................................... 78 (g) Reinsurance.......................................................... 79 (h) Storage.............................................................. 80 (i) Amounts Held......................................................... 80 (j) After the Term....................................................... 80 (k) Governmental Indemnity............................................... 80 Section 13. General Indemnity.............................................. 81 Section 14. Liens.......................................................... 86 Section 15. Protection of Title and Further Assurances..................... 87 ii 117 Page Section 16. Return of Aircraft and Records............................... 89 (a) Return............................................................. 89 (b) Status Upon Return................................................. 90 (c) Engines............................................................ 91 (d) Records and Documents.............................................. 91 (e) Condition of Aircraft.............................................. 92 (f) Final Inspection................................................... 93 (g) Aircraft Records and Documents..................................... 93 (h) Corrections and Subsequent Corrections............................. 94 (i) Functional Flight Check............................................ 94 (j) Export Certificate of Airworthiness................................ 95 (k) Service Bulletin and Modification Kits............................. 95 (l) Storage Upon Return................................................ 95 (m) Resale/Release Cooperation......................................... 95 Section 17. Events of Default............................................ 96 Section 18. Remedies..................................................... 98 Section 19. Alienation................................................... 104 (a) Lessor Assignments................................................. 104 (b) Security for Obligations........................................... 104 Section 20. Renewal Option............................................... 105 Section 21. Miscellaneous................................................ 106 (a) Severability, Amendment, and Construction.......................... 106 (b) Governing Law...................................................... 107 (c) Notices............................................................ 107 (d) Lessor's Right to Perform for Lessee............................... 107 (e) Counterparts....................................................... 108 (f) Quiet Enjoyment.................................................... 108 (g) Brokers............................................................ 108 (h) Investment of Funds................................................ 108 (i) Entire Agreement; Amendment........................................ 109 (j) Expenses........................................................... 109 (k) Federal Bankruptcy Code............................................ 109 (l) U.S. Registration Number........................................... 110 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial.............................................................. 110 (n) Limitation on Recourse............................................. 111 (o) Successor Trustee.................................................. 111 (p) Article 2-A of the UCC............................................. 112 iii 118 ANNEXES Annex I - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Aircraft Records and Documents Exhibit C - Definitions and Values Exhibit D1 - Lease Supplement No. 3 Exhibit D2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Assignment of Permitted Sublease iv EX-4.23 24 RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-6] 1 EXHIBIT 4.23 THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-6] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE UNDER A SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-6] DATED AS OF SEPTEMBER 22, 1989, AMENDED AND RESTATED AS OF OCTOBER 1, 1991, AND FURTHER AMENDED AND RESTATED AS OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF. - -------------------------------------------------------------------------------- SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-6] Dated as of December 15, 1989 Amended and Restated as of October 1, 1991 And Further Amended and Restated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as amended Lessor and AMERICA WEST AIRLINES, INC. Lessee One Airbus A320-231 Aircraft Manufacturer's Serial No. 65 U.S. Registration No. N626AW - -------------------------------------------------------------------------------- 2 SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of December 15, 1989, as amended and restated as of October 1, 1991, and as further amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes," "Excepted Payments," "Indenture Supplement," "Note Holder," "Pass Through Trust," "Pass Through Trust Agreement," "Pass Through Trustee," "Past Due Rate," Principal Amount," "Refinancing Transaction," "Refunding Agreement," "Restatement Date," "Sublease Assignment", "Trust Company" and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement," "Liquidity Facility," "Liquidity Provider" and "Subordination Agent" shall have 3 the meanings specified in the Intercreditor Agreement (as defined in the Pass Through Trust Agreement); and the term "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or cause the direction of the management and policies of a Person whether by contract or otherwise. "Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement d'interet economique formed under the laws of the French Republic, and its successors and assigns. "Aircraft" shall mean the Airframe leased hereunder and described in Lease Supplement No. 1 (or any airframe from time to time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any Engine substituted therefor hereunder) with respect to such Airframe, whether or not any such initial or substituted Engines may from time to time no longer be installed on the Airframe or may be installed on any other airframe, (ii) Parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Aircraft Records and Documents and all other logs, manuals and records with respect to such Aircraft, and (v) all substitutions, replacements and renewals of any and all thereof. "Aircraft Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft (except Engines or engines from time to time installed thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such model aircraft (except Engines or engines from time to time installed thereon) which may from time to time be substituted for such aircraft (except Engines or engines from time to time installed thereon) pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same shall be incorporated or installed on or attached to the Airframe, or so - 2 - 4 long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from the Airframe (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor in accordance with Section 8 of the Foreign Lease Agreement); provided, however, that at such time as an aircraft (except Engines or engines from time to time installed thereon) shall be deemed part of the property leased hereunder in substitution for the Airframe pursuant to the applicable provisions hereof and the replacement Airframe shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged) and shall be subject to the Foreign Lease Agreement, the replaced Airframe shall cease to be the Airframe hereunder. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that such Aircraft, Airframe, Engine or Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Aircraft as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and - 3 - 5 location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien, Head Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section 18 in which case only Lessor shall select such appraiser (which appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Aircraft shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to Section 4(a)(i). - 4 - 6 "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 3. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Buyer Furnished Equipment" shall mean the equipment which was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar equipment furnished to Lessee. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. "Claims" shall have the meaning specified in Section 13. - 5 - 7 "Code" shall mean the Internal Revenue Code of 1986, as amended. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. "Consent and Guaranty" shall mean the Amended and Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated as of December 30, 1988, in the form attached to the Purchase Agreement. "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean December 22, 1989, being the date the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) each of the two IAE Model V2500 engines listed by manufacturer's serial number in Lease Supplement No. 1 and initially installed on the Airframe covered by such Lease Supplement, whether or not from time to time thereafter no longer installed on the Airframe or installed on any other aircraft or airframe, and (ii) any replacement engine which may from time to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c) hereof (or, so long as the foreign Lease Agreement is in effect, in accordance with Section 10(b) of the Foreign Lease Agreement), for any Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor in accordance with Section 8 of the Foreign Lease Agreement). Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. The term "Engines" means, as of any date of determination, both Engines then leased hereunder. - 6 - 8 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Aircraft, Airframe or either Engine: (a) the actual or constructive total loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days; (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have - 7 - 9 undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing on the last day of the Term; or (h) as otherwise provided herein. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe which is a part of such Aircraft. An Event of Loss with respect to an Engine shall not, absent an Event of Loss with respect to the Airframe, be deemed an Event of Loss with respect to the Airframe. "Excluded Property" shall have the meaning set forth in Section 9(b) hereto. "Expiration Date" shall mean the date specified in Lease Supplement No. 3, on which date the Basic Term of this Lease shall expire. "FAA" shall mean the Federal Aviation Administra- tion of the United States Department of Transportation or any successor agency. "FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head Lessee to Foreign Lessee, and (iii) the Bill of Sale for the Aircraft dated the Delivery Date, from Foreign Lessee to Foreign Lessor. "Federal Aviation Act" shall mean the sections of Title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each - 8 - 10 Indenture Supplement, the Foreign Lease Documents, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass-Through Trust Agreement and each supplement thereto and any other agreement, document or certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Aircraft by the FAA. "Foreign Lease Agreement" shall mean the "Japanese Lease Agreement," as defined in the Indenture. "Foreign Lease Documents" shall mean the "Japanese Financing Documents," as defined in the Indenture. "Foreign Lease Supplement" shall mean the "Japanese Lease Supplement," as defined in the Indenture. "Foreign Lender" shall mean the "Japanese Lender," as defined in the Indenture. "Foreign Lessee" shall mean Air Tara Caymans II, Limited. "Foreign Lessor" shall mean the "Japanese Lessor," as defined in the Indenture. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. - 9 - 11 "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, the Aircraft or its operations. "Head Lessor's Lien" shall mean a Lessor's Lien under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Foreign Lessor, Foreign Lessee, Foreign Lender, Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture), each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, and their respective successors and permitted assigns, and any combination thereof and their respective officers, directors, agents, servants, subcontractors, employees, subsidiaries, Affiliates, shareholders and partners. "Indenture" shall mean the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of December 15, 1989, amended and restated as of October 1, 1991, and further amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the - 10 - 12 Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture, computed on the basis of a year of 360 days and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement No. 2, Lease Supplement No. 3 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989 BN-6] No. 1, dated December 22, 1989 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989 BN-6] No. 2, dated October 24, 1991 between Lessor and Original Head Lessee, as Lessee. - 11 - 13 "Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989 BN-6] No. 3, substantially in the form of Exhibit D hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Aircraft hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims (as defined herein) against Indenture Trustee in its individual capacity (and not as Indenture Trustee) not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Aircraft, the Airframe, any Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to, the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of - 12 - 14 their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents, the Foreign Lease Documents or the Purchase Documents or not permitted without consent (which consent has not been granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Aircraft, the Airframe, either Engine, the Trust Estate or the Operative Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except Liens resulting from a transfer not permitted by such Section) or 20 of this Lease or pursuant to Sections 10 and 11 of the Refunding Agreement or similar types of provisions in the Foreign Lease Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture, Lenders' Liens, or Liens contemplated by the Foreign Lease Documents. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft in effect on the date - 13 - 15 hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other maintenance program for the Aircraft which is approved by the aviation authority of the country of registry and complies with the requirements applicable to maintenance of the Aircraft contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Airframe, Engines, and components of the Aircraft, including, but not limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean, collectively, Manufacturer's Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be applicable in any given circumstance, together in each case with any subcontractor or supplier thereof. "Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French societe a responsabilite limitee, which as of the date hereof is owned by Airbus Industrie. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, the Tax Indemnification Agreement, the - 14 - 16 Financing Documents, that certain letter agreement dated as of the Restatement Date, relating to Stipulated Loss Values with respect to this Lease, and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Aircraft Lease Agreement [GPA 1989 BN-6], with respect to the Aircraft, dated as of December 15, 1989, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification Agreement [GPA 1989 BN-6], dated as of December 15, 1989, and amended and restated as of October 1, 1991, and amended and restated as of the Restatement Date, between the Original Head Lessee and Owner Participant, as the same may be amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA I, Inc., a Connecticut corporation. "Owner Participant" shall mean ________________ ___________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Partial Assignment" shall mean the A320 Partial Assignment, Assumption, Release and Amendment Agreement, dated as of December 30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified. "Participation Agreement" shall mean the Participation Agreement [GPA 1989 BN-6], dated as of December 15, 1989 and amended as of October 1, 1991, among Original Head Lessee, Parent, Owner Participant, Owner - 15 - 17 Trustee, Indenture Trustee and the Lenders named therein, as amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (excluding complete Engines or engines), including Buyer Furnished Equipment, which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Airframe or any Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Airframe or Engine (or so long as the Foreign Lease Agreement is in effect, Foreign Lessor in accordance with Section 8 of the Foreign Lease Agreement). Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America which has agreed (in form and substance satisfactory to Lessor) that all of its indemnity obligations which by the terms of this Lease are permitted in lieu of insurance shall be enforceable by and payable to Lessor directly or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee, which approval shall not be unreasonably withheld. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or - 16 - 18 association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Amended and Restated Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as partially assigned to Parent pursuant to the Partial Assignment, to which Airbus Industrie, as guarantor, has consented, and as the same may from time to time be further amended, supplemented or otherwise modified to the extent permitted by the terms thereof. "Purchase Documents" shall mean the Purchase Agreement, the Partial Assignment and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Renewal Rent becomes payable. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Airframe" and "Replacement Engine" shall have the meanings specified in accordance with their description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. - 17 - 19 "Restricted Use Period" shall have the meaning specified in Exhibit C. "Return Occasion" shall mean the event that occurs when possession of the Aircraft is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20(ii) (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional - 18 - 20 credit of such Basic Rent or Renewal Rent is to be made in respect thereof) except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date. In the event that it is necessary to determine a separate Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Airframe or such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth on, Exhibit A hereto. "Supplemental Agreement" shall mean the Supplemental Agreement dated as of September 28, 1989 between Foreign Lessor and Foreign Lessee (as the same may be amended, modified or supplemented from time to time). "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of the need to correct any failure of the Aircraft to satisfy the requirements of Section 16 hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) Lessor's pro rata share of any payment due to any PassThrough Trustee in respect of fees or expenses pursuant to the Pass-Through Trust Agreement; (viii) Lessor's pro rata share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement and/or the Refunding Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate (all computations of interest under this Lease to be made on the basis of a 360-day year, as applicable, and twelve 30-day months) calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, as the case may be, not paid on the due date thereof for the - 19 - 21 period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Lessor's pro rata share" means as of any date of determination a fraction the numerator of which is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-6], dated as of December 15, 1989, as amended and restated as of October 1, 1991, and as amended and restated as of the Restatement Date, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20, the Renewal Term, for which the Aircraft is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989 as amended by Trust Supplement No. 1, as further amended by Trust Supplement No. 2 and as further amended by Trust Supplement No. 3, between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include the Trust Supplements. "Trust Estate" shall have the meaning specified in the Trust Agreement. - 20 - 22 "Trust Supplements" shall mean Trust Supplement No. 1, Trust Supplement No. 2, Trust Supplement No. 3 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1989 BN-6] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1989 BN-6] No. 2 dated October 24, 1991 between Lessor and Owner Participant. "Trust Supplement No. 3" shall mean Trust Agreement Supplement [GPA 1989 BN-6] No. 3 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Aircraft or the Airframe and Engine or engines installed thereon at that time to a third party pursuant to which such Aircraft or the Airframe and Engine or engines (i) shall be operated solely by regular employees of Lessee (or any Permitted Sublessee) possessing all current certificates and licenses required under the Federal Aviation Act or, if the Aircraft is not registered under the Federal Aviation Act, all certificates and licenses required by the laws of the jurisdiction of registry (it is understood that cabin attendants need not be regular employees of Lessee (or any Permitted Sublessee)) and Lessee (or any Permitted Sublessee) otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee (or any Permitted Sublessee) in accordance with its normal maintenance practices and this Lease, and otherwise the insurance required hereunder shall be maintained and the Aircraft shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and subject to the conditions set forth in this Lease. - 21 - 23 Section 3. Delivery and Acceptance; Term; Rental Period. (a) Time of Delivery. The Aircraft was delivered to Lessee, and Lessee accepted delivery of the Aircraft, on December 22, 1989. (b) [Intentionally Left Blank] (c) Acceptance of Aircraft. The Aircraft leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. (e) Rental Period. Lessor and Lessee agree that the period between each Basic Rent Payment Date shall constitute a rental period for purposes of Section 467 of the Code. Section 4. Rent; Minimum Payments. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in advance and allocable to the rental period beginning on such date, as set forth on Schedule I to Exhibit C, due and payable on each Basic Rent Payment Date; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable within fifteen (15) days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or - 22 - 24 equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Head Lessor's Lien or any Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in The City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except that all Excepted Payments, and upon discharge of the Lien of the - 23 - 25 Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address in The City of New York as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft (subject to the provisions of Section 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any Permitted Sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. - 24 - 26 Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT - 25 - 27 IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR BY ONE OF ITS AFFILIATES HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND LESSOR HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: Lessor represents and warrants that (x) on the Delivery Date, - 26 - 28 Lessor had, and on the Restatement Date Lessor has, the right to lease the Aircraft hereunder, (y) on the Delivery Date the Aircraft was, and on the Restatement Date the Aircraft is, free of Lessor's Liens and Head Lessor's Liens, and (z) on the Restatement Date Lessor has such title to the Aircraft as was transferred to it on the Delivery Date and (B) Lessor covenants that it shall maintain such title to the Aircraft as was transferred to it on the Delivery Date and shall not create, incur, assume or suffer to exist any Lessor's Lien or Head Lessor's Lien on the Aircraft. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Delivery Date and as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of this Lease and the delivery of the Aircraft and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Aircraft continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or airframe or propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect thereto under the Purchase Agreement (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Aircraft), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its - 27 - 29 request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or either of the Engines or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject any Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that no transfer of the registration of any Engine shall be effected in connection - 28 - 30 therewith; and provided, further, that (A) no such agreement or arrangement contemplates, results in or requires the transfer of title to any Engine, and (B) if Lessor's title or Foreign Lessor's (so long as the Foreign Lease Agreement is in effect) to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and not an Event of Default and Lessee shall comply with Section 11(b) hereof in respect thereof; (2) deliver possession of the Aircraft, the Airframe or any Engine to the manufacturer thereof, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on such Aircraft, Airframe or Engine or any part thereof or for alterations or modifications in or additions to such Aircraft, Airframe or Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Aircraft or the Airframe to the United States of America or any instrumentality or agency thereof pursuant to a sublease; (4) (i) subject the Airframe to the Civil Reserve Air Fleet Program and transfer possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; or (ii) subject the Airframe to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install an Engine on an airframe (other than the Airframe) owned by Lessee free and clear of all - 29 - 31 Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or engines installed thereon; (6) install an Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that each Engine leased to Lessee hereby shall not become subject to the lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of such Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the owner of such Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install an Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine and Lessee shall comply with - 30 - 32 Section 11(b) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in such Engine under applicable law until compliance by Lessee with such Section 11(b); (8) enter into a Wet Lease for the Aircraft or the Airframe and engines installed thereon in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee (or any Permitted Sublessee) shall enter into any Wet Lease for a period of more than one year (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given prior to entering into such Wet Lease, if practicable, but in any event promptly after entering into such Wet Lease); or (9) sublease the Aircraft or the Airframe to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section 6(a) hereof (other than the transfer of an Engine which is deemed to have been an Event of Loss) shall be expressly subject and subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Aircraft, the Airframe or such Engine to be "tax-exempt - 31 - 33 use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); and (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Aircraft or the Airframe to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the - 32 - 34 Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Aircraft in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Aircraft by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Aircraft, to the registry of the Aircraft in the name of the Lessor (or Lessee, as "lessee," or the proposed Permitted Sublessee, as "sublessee," as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction; and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. The rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and - 33 - 35 Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or constitute a waiver of Lessor's rights or remedies hereunder. Any Permitted Sublease shall expressly prohibit any further sub-sublease by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with a Foreign Air Carrier and, if practicable, not later than five days prior to entering into any Permitted Sublease with any other proposed Permitted Sublessee, but, in the case of a Permitted Sublease with a Permitted Sublessee other than a Foreign Air Carrier, in any event promptly after entering to any such Permitted Sublease) and (ii) a copy of each Permitted Sublease which has a term of more than three months. (b) Reciprocal Recognition of Rights. In the event the lessor or secured party of any airframe leased to Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or other security agreement in accordance with Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement covering such airframe also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement, Lessor hereby agrees for the benefit of such lessor or secured party that Lessor will not acquire or claim, as against such lessor or secured party, any right, title or interest in any such engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease or conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. Lessor also hereby agrees for the benefit of the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as against such mortgagee, any right, title or interest in any engine subject to the lien of such mortgage as the result of such engine being installed on the Airframe at any time while such engine is subject to the lien of such mortgage. - 34 - 36 (c) Lawful Insured Operations. Lessee will not permit the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, such of any manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the Aircraft is registered with the FAA, or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Aircraft or impair the interest of Lessor therein or impair the validity or priority of the Lien of the Indenture or result in a risk of criminal liability of Lessor or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Aircraft during the Basic Term or then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Aircraft, or suffer or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such - 35 - 37 risks, in the amounts and otherwise as required by this Lease. Lessee shall in no event permit the Aircraft, the Airframe or any Engine to be used, operated or maintained in Japan. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by Lessee without discrimination and as if Lessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by, the central civil aviation authority of the country of registry and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such condition as is necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times - 36 - 38 under the Federal Aviation Act, or the applicable laws of any other jurisdiction in which the Aircraft may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the Aircraft at all times, at its expense, to be duly registered during the Restricted Use Period and, subject to Section 11 of the Refunding Agreement, thereafter under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as (i) while the Aircraft is registered under the Federal Aviation Act, each of the Lessor or its successors or assigns is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not register the Aircraft or permit the Aircraft to be registered under any laws other than the Federal Aviation Act at any time except as provided in Section 11 of the Refunding Agreement and shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Aircraft and this Lease at all times. At any time after the Restricted Use Period, Lessor, upon compliance with all of the terms of Section 11 of the Refunding Agreement, shall, at the request and sole expense of Lessee, cooperate with Lessee to take all actions reasonably required to change the registration of the Aircraft to another country. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") in the cockpit of the Aircraft and on each Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a location reasonably adjacent to and not less prominent than the airworthiness certificate for the Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate - 37 - 39 information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Aircraft or either Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Airframe and Engines to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause its Permitted Sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee on reasonable prior notice at reasonable times to visit, inspect and survey the Aircraft (including, without limitation, going on board the Aircraft, and inspecting the Aircraft during maintenance checks when panels and bays are open and subject to view), its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as Lessor does not believe a Default or Event of Default has occurred hereunder inspections shall be performed during regularly scheduled maintenance checks of the Aircraft. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Airframe or any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. - 38 - 40 Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a - 39 - 41 certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Aircraft, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) within fifteen (15) days following the end of each calendar month throughout the Term, an Airframe and Engine status report, substantially in the form of Exhibit K hereto, including, without limitation, (A) a summation of hours and cycles accumulated on the Airframe and Engines by individual serial number during such preceding calendar month and (B) the identity of the airframe (including the "N" number and, at Lessor's request, ownership and lien interests in respect thereof) on which each Engine was installed as of the end of each such calendar month, and, if Lessor so requests, the location of any such airframe. The foregoing shall not be deemed to require reports regarding hours or cycles on any Parts; (vi) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vii) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Aircraft, either Engine or any Part with a repair or replacement cost (including labor charges) in excess of $1,000,000 or any incident required to be reported to the FAA or other Government Entity; (viii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (ix) promptly after Lessor's written request therefor, notice of the time and location of upcoming C Checks, major Engine checks, major Airframe structural - 40 - 42 checks and a description of modification of the Aircraft required by an FAA airworthiness directive, a mandatory manufacturer service bulletin or any other modification with a materials and labor cost in excess of $1,000,000; (x) together with each delivery of financial statements pursuant to Section 8(a)(ii) above, a certificate signed by Lessee's auditors thereon (i) briefly setting forth the scope of their examination (which shall include a review of this Section, (ii) stating whether or not their examination has disclosed the existence, during the fiscal year covered by such financial statements, of any Default or Event of Default and, if their examination has disclosed such a Default or Event of Default, specifying the nature and period of existence thereof, and (iii) stating that they have examined the officer's certificate delivered therewith pursuant to Section 8(a)(vi) above; (xi) As soon as possible and in any event within thirty (30) days after Lessee knows or has reason to know thereof, a certificate of a Responsible Officer specifying: (X) the occurrence or expected occurrence of any Reportable Event with respect to any Plan; or (Y) the institution of proceedings or the taking or expected taking of other action by PBGC or Lessee or any Commonly Controlled Person to terminate, withdraw or partially withdraw from any Plan and with respect to a multi-employer Plan, the reorganization or insolvency of the Plan and in addition to such notice, deliver to Lessor whichever of the following may be applicable: (A) a certificate of a Responsible Officer setting forth details as to such Reportable Event of the action that Lessee or Commonly Controlled Person proposes to take with respect thereto, together with a copy of any notice of such Reportable Event that may be required to be filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent to institute such proceedings or any notice to PBGC that such plan is to be terminated, as the case may be; and (xii) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and - 41 - 43 franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Aircraft, the Airframe or either Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets to, or, without the prior consent of Owner Participant, acquire all or any substantial part of the property or other assets or capital stock of (if such acquisition is analogous in purpose or effect to a consolidation or merger), any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, - 42 - 44 unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Aircraft as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its federal and state income tax returns (or to permit the filing of the federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as - 43 - 45 may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Aircraft, the Airframe or the Engines. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Aircraft, Airframe or Engines only in commercial passenger operations and related cargo operations. Unless Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the Aircraft, Airframe or Engines to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Aircraft, Airframe or Engines for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the Maximum Foreign Use Percentage. In addition, until the expiration of the Term or termination of the Foreign Lease Agreement, Lessee will not locate, use or permit the use of the Aircraft in, to or from Japan. Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft to be operated in any member state of the European Union or other European country, Lessee shall deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all aircraft (including, without limitation,the Aircraft) operated by Lessee (or such Permitted Sublessee). - 44 - 46 (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this Second Amended and Restated Aircraft Lease Agreement unless it had available to it the benefits of a Lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Aircraft hereunder. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Aircraft, the Airframe, any Engine or Part or the execution, delivery or performance of this Lease and the Operative Documents to which it is a party by Lessee or the enforcement thereof against Lessee. (k) Security Opinion; Annual Certificate. (i) During such times that the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft - 45 - 47 and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Aircraft is registered under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (iii) Whether the Aircraft is registered under the Federal Aviation Act or under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor annually a certificate (reasonably satisfactory to Lessor) signed by a Responsible Officer of the Lessee certifying that Lessee is in compliance with the provisions of the penultimate paragraph of Section 9(b) regarding Excluded Property and any equipment or seats which such Excluded Property replaces. (l) Letter of Credit. (X) As security for its obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal - 46 - 48 provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount") which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on first demand by Lessor at any time, if accompanied by its statement (i) that a Default under Section 17(e), (f) or (g) or an Event of Default has occurred or (ii) that the letter of credit will expire within twenty (20) days from the date of demand, which amount may be applied, retained or utilized as provided in clause (Y); (ii) be maintained in full force and effect at all times until ninety-one (91) days after the end of the Term with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five (5) Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that a Letter of Credit in the form set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long-term unsecured debt rating at least equal to its rating on the date hereof; (iii) be expressly designated as transferable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term, then Lessor shall return the Letter of Credit to Lessee or terminate it. (Y) If an Event of Default has occurred and is continuing, in addition to any other rights or remedies Lessor may have hereunder, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to draw on the Letter of Credit and, with respect to amounts so drawn, hold same as security for Lessee's obligations under this Lease, retain same for its own account and apply (including, without limitation, by way of set off against) same, or such amounts thereof as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease), to remedy any breach by Lessee of this Lease and the other Operative Documents or to recompense Lessor for any loss, damage, cost or expense or - 47 - 49 other Claim due or owing hereunder; provided, however, that in the case of any drawing in respect of any claim for payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts ("Equity Amounts") which would (absent an Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders). If Lessor draws on the Letter of Credit because the Letter of Credit will expire within twenty (20) days from the date of demand, then Lessor may elect in its sole and absolute discretion to apply such amounts in satisfaction of any Equity Amounts which would have been or would become distributable under the Indenture to Lessor or Owner Participant if Lessee were fully to perform its obligations under the Lease on a timely basis in the inverse order of which such obligations would be distributable; and provided further, that the amount of Lessee's obligations in respect of Equity Amounts that shall be satisfied by such application shall equal (i) that amount from the proceeds of the Letter of Credit which this Lessor elects to apply (the "Applied Amount") in satisfaction of Lessee's obligations in respect of Equity Amounts (such obligations to be satisfied by application of the Applied Amount being referred to as the "Satisfied Obligations") plus (ii) an amount equal to interest at the Applicable Rate on the Applied Amount from the date of application of the Applied Amount to the date on which the Satisfied Obligations otherwise would have been due (with "Applicable Rate" meaning a per annum rate of interest computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed equal to the rate for U.S. Treasury bills with a maturity that most closely corresponds to the remaining Term, it being agreed that in no event shall the Applicable Rate exceed the lowest Debt Rate (as defined in the Indenture) provided in any Equipment Note). Lessee shall not be obligated to reinstate the amount of the Letter of Credit to the extent proceeds thereof are applied in satisfaction of Lessee's obligations in the manner provided in the immediately preceding proviso. If (a) the Lessor shall hold any proceeds of the Letter of Credit as security for Lessee's obligations to Lessor a Letter of Credit with a face amount available for drawdown in an amount equal to the amount of the proceeds so held by Lessor and otherwise meeting the requirements of this Section 8(1), Lessor shall pay such proceeds to Lessee for Lessee's own account. - 48 - 50 (m) ERISA. Lessee will not, nor will it permit any of its subsidiaries to, (a) terminate, within the meaning of Title IV of ERISA, any Plan so as to result in any material liability to the PBGC, (b) engage in any "prohibited transaction" (as defined in Section 4975 of the Code) involving any Plan that would result in material liability for an excise tax or civil penalty in connection therewith, (c) incur or suffer to exist any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, involving any Plan, or (d) allow or suffer to exist any event or condition with respect to ERISA, which would be likely to have a material adverse effect on Lessee's condition (financial or otherwise), business, operations or prospects or on Lessor's interests, rights or remedies. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). All Parts which are at any time removed from the Aircraft shall remain the property of Lessor (provided that, - 49 - 51 so long as the Foreign Lease Agreement is in effect, title to such Parts shall remain with Foreign Lessor), subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Aircraft and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Aircraft as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine to the extent made mandatory for Lessee in respect of the Aircraft, Engines or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Airframe, Engines or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Airframe, either Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Airframe, Engines and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Aircraft as the result of such alteration, modification or addition, shall immediately vest in Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) and become subject to the Lien of - 50 - 52 the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Aircraft on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Aircraft without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Aircraft would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Aircraft (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor (provided that, so long as the Foreign Lease Agreement is in effect, title to such Parts shall remain with Foreign Lessor). If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not - 51 - 53 to acquire or claim, as against Lessor, any right, title or interest in the Aircraft, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor or Foreign Lessor, as the case may be, and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Aircraft in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Aircraft as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Aircraft. Notwithstanding any other provision hereof, and without limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted Sublessee) may install in the Aircraft audio visual, entertainment or telephonic equipment (including seats with such equipment installed therein) (any or all of which are hereafter referred to as "Excluded Property") in the ordinary course of business, and Lessor shall not claim or acquire title thereto and the rights of the owners thereof therein shall not constitute a default hereunder; provided that (i) any such Excluded Property shall be removed prior to the date of a Return Occasion without causing any damage to the Aircraft and without diminishing or impairing the value, utility, remaining useful life or condition which the Aircraft would have had at such time had such Excluded Property not been installed, (ii) any equipment or seats which such Excluded Property replaces shall be properly stored with the interests of Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee or warehouse, and properly reinstalled on the Aircraft prior to the date of a - 52 - 54 Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are required as a result of such removal and/or reinstallation. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Aircraft, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Airframe or either Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided the Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) in accordance with Section 9(a) (and to be subjected to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the - 53 - 55 Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture provided that this limitation on the gross-up shall be without derogation to Lessor's right to be indemnified pursuant to the remainder of this Section 10. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee; provided that in any circumstance in which the Lessor is required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and - 54 - 56 all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or otherwise, by any Federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a "Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) the Aircraft, the Airframe, any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, reregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any refinancing, modification or - 55 - 57 reissuance or any other obligation evidencing any new loan, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, any Taxes imposed by the Federal government of the United States of America upon or with respect to, based on or measured by, the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (other than Taxes included in the calculation of an after-tax payment, or Taxes in the nature of sales or use Taxes, license Taxes, value-added Taxes or property Taxes), (ii) In the case of any Indemnitee, Taxes on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any foreign, state or local government or taxing authority (other than Taxes included in the calculation of an after-tax payment, Taxes in the nature of sales Taxes, use Taxes, property Taxes, value-added Taxes or rental Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which are the direct result of gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee (other than, in the case of Owner Trustee, as a result of the occurrence of an Event of Default) or any voluntary sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (x) the transactions - 56 - 58 contemplated or effected by the Refunding Agreement and the amendments to the Lease occurring in connection therewith, (y) an Event of Default and the exercise by any Indemnitee of its remedies under the Lease or the Indenture, as the case may be, and (z) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms of the Lease; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed as a result of a transferee of such Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any Part or any interest in the Operative Documents being a foreign entity or not having its principal office in the United States, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this Section 10 or to a failure by Lessee to satisfy its obligations related to such return, (vii) Taxes imposed on an Indemnitee as a result of a breach of its representations, warranties or covenants contained in Sections 9(a), 9(b)(11), 9(c), 9(d), 9(e), 10, 12, or 16 of the Refunding Agreement or Section 21(f) of this Agreement in any material respect or from a failure by an Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Aircraft, (ix) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents, and - 57 - 59 (x) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts, the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust. Notwithstanding anything to the contrary contained in this Section 10, the provisions of this Section 10(b) shall not apply to, and Lessee shall hold each Indemnitee harmless against, and indemnify each Indemnitee on an after-tax basis (as provided under Section 10(e)) for, any Taxes imposed by any Taxing Authority with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, in connection with or relating to the transactions undertaken pursuant to the Japanese Financing Documents (and any other documents or agreements relating thereto unless such documents or agreements are or relate solely to Operative Documents other than the Japanese Financing Documents) including, without limitation, sales Taxes, value-added Taxes and any Taxes required to be withheld and paid over to the United States Federal government pursuant to Subtitle A of the 1986 Code or any successor provisions with respect to any amounts paid or deemed to be paid to the Japanese Lessor by any Indemnitee pursuant to the Japanese Financing Documents, but excluding any net income taxes payable to the United States Federal government or any state or local Taxing Authority as a consequence of a determination that the Lease is not a true lease for Federal income tax purposes. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) any Tax based on or measured by gross or net income, capital or net worth, franchises, excess profits or conduct of business imposed on an Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction (other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents); and - 58 - 60 (ii) a Tax imposed by any Taxing Authority other than the Federal government of the United States of America based on, or measured by gross income or receipts, to the extent such Tax is attributable to the operation or registration of the Aircraft in such jurisdiction or to the transactions contemplated by the Operative Documents or is the result of the activities of Lessee or any Affiliate of either thereof in such jurisdiction, including residence. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to Owner Trustee and Owner Participant or will notify Owner Trustee or Owner Participant of such requirement and make such report or return in such manner as shall be reasonably satisfactory to Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of federal income taxes imposed on Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest federal corporate income tax rate applicable to Owner Participant in the year of payment. - 59 - 61 (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (A) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (B) the actual reduction in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (A) above would exceed (x) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (y) the portion of all prior payments computed pursuant to (A) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such - 60 - 62 Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. If reasonably requested by Lessee in writing, an Indemnitee shall upon receipt of an indemnity reasonably satisfactory to it and at the sole expense of Lessee (including, without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayments of estimated Taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interest) in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, that, in each such instance, such proceedings do not involve any substantial risk or danger of the sale, forfeiture or loss of the Aircraft, and provided further that the Indemnitee shall have the right to forego administrative proceedings with respect to the claim and contest the claim in an appropriate court of its choosing and provided further that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) no Event of Default has occurred and is continuing, (ii) the amount of such Taxes shall be at least $50,000, (iii) in the event an administrative proceeding is to be appealed in a judicial proceeding, as for the first level of judicial proceeding, Lessee shall have provided the Indemnitee with an opinion of legal counsel selected by the Indemnitee and reasonably acceptable to Lessee ("Tax Counsel") to the effect that a reasonable basis exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), - 61 - 63 (iv) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, Lessee shall have advanced or caused to be advanced to such Indemnitee sufficient funds (on an interest-free basis) to make such payments and shall have agreed to indemnify such Indemnitee against any adverse tax consequences of such advance, and (v) in the event a judicial decision is to be appealed, the amount of such Taxes is at least $150,000 and the Indemnitee shall have received an opinion of Tax Counsel (which opinion shall be obtained at Lessee's sole expense) to the effect that it is more likely than not that the Indemnitee will prevail, and in the event that the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of Tax Counsel, which opinion shall be obtained at Lessee's sole expense, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which such Indemnitee or Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of a statutory change in law, it is as likely as not that the position will prevail. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. - 62 - 64 (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released from its responsibility to contest such claim, or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include such affiliated group. Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Airframe. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Airframe or the Airframe and any Engines then installed thereon, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be continuing at the time of such election or at the time of replacement or if the Foreign Lease Agreement does not permit such replacement or requires the payment of additional amounts thereunder (unless Lessee in its election pays such amount due as a result thereof under the Foreign Lease Agreement): (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss - 63 - 65 (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Airframe and such Engines then installed thereon, title to (or, so long as the Foreign Lease Agreement is in effect, beneficial ownership of) a replacement Airframe (together with the same number of replacement Engines as the Engines), such replacement Airframe and Engines (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe and replacement Engines may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and to be in at least as good operating condition as, the Airframe and the Engines, if any, so replaced (assuming the Airframe and the Engines were maintained in accordance with the requirements of this Agreement, whether or not they are in fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with equivalent or better modification status and, in the case of Engines, in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens and Head Lessor's Liens and any Lien arising out of the Foreign Lease Agreement), all of Lessor's right, title and interest, if any, in and to the Airframe and the Engines suffering the Event of Loss as well as all of Lessor's right, title and interest in and to any Engine constituting part of the Aircraft and replaced as provided above but not installed thereon at the time of the Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed part of the property leased hereunder and shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in replacement of the Airframe or Engines under this Section 11(a)(i) shall result in any reduction of Rent. (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss or, if earlier, with respect to insurance - 64 - 66 proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee (but in no event later than the last day of the Term) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens, Head Lessor's Liens and Liens arising out of the Foreign Lease Agreement), all of Lessor's right, title and interest, if any, in and to the Airframe and Engines suffering the Event of Loss, as well as all of Lessor's right, title and interest, if any, in and to any Engine constituting part of the Aircraft but not installed thereon at the time of the Event of Loss. (b) Event of Loss with Respect to an Engine. Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence (but in no event later than the last day of the Term), pay all amounts due under the Foreign Lease Agreement as a result thereof and convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to (or so long as the Foreign Lease Agreement is in effect, beneficial ownership of) another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine and is suitable for installation and use on the Airframe - 65 - 67 without diminishing the value, remaining useful life or utility of such Airframe, free of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) with a full warranty bill of sale, in form and substance reasonably satisfactory to Lessor and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect), the Foreign Lease Agreement (if then in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence of title to or, so long as the Foreign Lease Agreement is in effect, beneficial ownership of such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant, Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to or, so long as the Foreign Lease Agreement is in effect, beneficial ownership of such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens), and is duly leased hereunder and under the Foreign Lease Agreement (if in effect), and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee - 66 - 68 certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish Owner Participant, at Lessee's election, (x) an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant or (y) an indemnity for any adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens, and any Lien arising out of the Foreign Lease Documents), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein and shall be deemed part of the same Aircraft as was the Engine replaced thereof. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Conveyance of Replacement Airframe. Prior to or at the time of any conveyance of a replacement Airframe pursuant to Section 11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the following documents which shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect on said date: (i) a full warranty bill of sale, in form and substance satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be approved by the FAA on said date), executed by the owner thereof, in favor of Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) and, cause - 67 - 69 supplements, reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), to this Lease, the Foreign Lease Agreement (if then in effect), the Indenture (if then in effect) and the Trust Agreement (if then in effect), with respect to such replacement Airframe and to be duly filed for recordation pursuant to the Federal Aviation Act or other applicable Governmental Entity; (ii) the certificate specified in Section 12(f) hereof demonstrating compliance with the insurance requirements of Section 12 with respect to the replacement Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such other evidence of title as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request) to the effect that, upon such conveyance, Lessor will acquire good title to, or, so long as the Foreign Lease Agreement is in effect, beneficial ownership of, such replacement Airframe free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe may be subject to Permitted Liens), that such replacement Airframe will be leased hereunder and under the Foreign Lease Agreement (if then in effect) to the same extent as the Airframe replaced thereby and will be subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and Replacement Engine and the Lien of the Indenture on such Replacement Airframe and Replacement Engine; and that Lessor and Indenture Trustee, as the assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement airframe and engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement; (iv) a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (v) such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(c), the - 68 - 70 taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(c), in each case in form and substance satisfactory to each such party, including evidence that the Aircraft of which the replacement Airframe is a part has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of this Lease and application for registration of such replacement Airframe in the name of Lessor has been duly made with the FAA or other applicable Governmental Entity and Lessee has temporary or permanent authority to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code financing statements covering the replacement Airframe as may be requested by Lessor or Indenture Trustee, (vii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal prepared in accordance with the Appraisal Procedure which confirms that the replacement Airframe and any replacement Engine has a value, utility and remaining useful life at least equal to that of the Airframe and Engines which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of this Lease whether or not they are in fact so maintained; and (ix) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe is free and clear of Lessor's Liens, Head Lessor's Liens and any Lien arising out the Foreign Lease Documents), all of Lessor's right, title and interest in and to the Aircraft which suffered the Event of Loss. No Event of Loss with respect to the Aircraft under the circumstances contemplated by the terms of this Section 11(c) shall result in any reduction in Rent. For all purposes of this Lease, each such replacement Aircraft (together with any Engines constituting part of the Aircraft being replaced as to which an Event of Loss has not occurred) shall be deemed part of the property leased hereunder and shall be deemed the "Aircraft" as defined herein. (d) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other - 69 - 71 than insurance proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (e) Requisition for Use by Government with Respect to the Aircraft. Subject to Section 11(f) below, in the event of the requisition for use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other than a requisition constituting an Event of Loss), Lessee shall promptly notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) thereof and all of Lessee's obligations under this Lease with respect to such Airframe or Engine shall continue to the same extent as if such requisition had not occurred. All payments received by Lessor or Lessee from the Governmental Entity for the use of such Airframe or Engine during the Term shall be paid over to, or retained by, Lessee if no Default or Event of Default shall have occurred and be continuing; and all other payments received by Lessor or Lessee from the Governmental Entity shall be paid over to, or retained by, Lessor. If the Airframe and such Engines or engines are not returned by the end of the Term, an Event of Loss shall be deemed to have occurred on the last day of the Term and, on the last day of the Term, Lessee shall either pay to Lessor the amount provided herein for an Event of Loss to the Airframe - 70 - 72 and such Engines or engines on such date or provide a replacement Aircraft and Engine on such date in the condition provided for in Section 16. In the event of the requisition for use by the Governmental Entity of any Engine without the requisition for use of the Airframe, Lessee will replace such Engine hereunder by complying with the terms of Section 11(b) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (f) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Aircraft, in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and engines and as hereinafter provided. Each and any - 71 - 73 policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured of any breach or violation by Lessee or any other insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees or if such insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war risk and allied perils coverage), after notice to Lessor, Owner Participant, Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse provided, however, that if any such notice period is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable, (iv) shall include coverage for any country in or over which the Aircraft is located or operated, and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender or the other Indemnitees, or their respective permitted - 72 - 74 assigns, with respect to the Aircraft. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the consent of Lessee) covering the Aircraft, and "all-risk" coverage including transit insurance with respect to Engines and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull insurance reasonably acceptable to Lessor with Approved Insurers if the Aircraft, Airframe or Engines are operated on routes or kept in locations outside of the United States of America. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for - 73 - 75 Persons leasing or financing similarly-sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged. Anything herein to the contrary notwithstanding, at all times while the Aircraft is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Aircraft. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Aircraft, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days - 74 - 76 (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war risks or allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse provided, however, that if any such notice period is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable, (iv) shall include coverage for any country in or over which the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, and the other Indemnitees and their respective permitted assigns, with respect to the Aircraft, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee, as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor, Owner Participant and Foreign Lessor shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor, Foreign Lessor, or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor, Foreign Lessor, or Owner Participant. Lessee shall give Lessor reasonable prior written notice of - 75 - 77 any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant, Indenture Trustee and Foreign Lessor for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its payment of such Stipulated Loss Value and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any - 76 - 78 property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and - 77 - 79 Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Aircraft and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Aircraft complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war risk and allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance; provided, however, that if any such notice period is not reasonably obtainable, such Approved Broker shall provide for as long a period of prior notice as shall then be reasonably obtainable. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris if the relevant primary insurer shall have obtained reinsurance and such reinsurance will (i) be on the same terms as the original insurance and will include the provisions required by this Agreement, (ii) provide in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contain a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] dated as of October 1, 1991 as amended and restated as of - 78 - 80 November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for passenger aircraft of similar size as the Aircraft in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the - 79 - 81 extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on an after-tax basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims, damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee from (and including) and after the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Aircraft to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations thereunder or to file the documentation necessary to continue FAA registration of the Aircraft), delivery, nondelivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, - 80 - 82 including, without limitation, any interest therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such defect shall be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the - 81 - 83 Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien or an Original Head Lessee's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, either in the air or on the ground, or which may be caused by any defect in such Aircraft, Airframe, Engine, engine or Part from the material or any article used therein - 82 - 84 or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of the location of such Aircraft at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition, (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not - 83 - 85 required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee has the right to control the defense thereof is materially prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section. Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any - 84 - 86 indebtedness incurred with respect to the purchase of the Aircraft or of the residual value of the Aircraft. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee, Foreign Lessor and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Lessor's Liens, Head Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor, Foreign Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor, Foreign Lessor or Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, - 85 - 87 within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor, Foreign Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement, the Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft. If any filing or recording is reasonably necessary to protect the interests of Lessor, Foreign Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), and upon request by Lessor or Foreign Lessor cause any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor, Foreign Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to Lessor, Foreign Lessor and Indenture Trustee, evidence, - 86 - 88 reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease, and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's, Foreign Lessor's and Indenture Trustee's interest in the Aircraft and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in favor of Lessor, Foreign Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor, Foreign Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing - 87 - 89 Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture, the Foreign Lease Documents and the other Financing Documents, any replacement Aircraft or Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Lessee's obligations under this Section 15 are subject to the reasonable cooperation of the applicable parties. Section 16. Return of Aircraft and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Aircraft to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree, fully equipped with all required Engines, or other engines owned by Lessee (which shall thereupon become Engines as hereinafter provided) meeting the conditions specified in this Section and Exhibit E, duly installed thereon by delivering the same to the Lessor at such location. Lessee shall comply with Section 11(b) and this Section 16 with respect to any engines installed on the Aircraft returned to Lessor hereunder and meeting the conditions described herein which were not originally installed on the Aircraft. (b) Status Upon Return. Upon any Return Occasion hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Original Head Lessee's Liens, Lessor's Liens, Lenders' Liens and Liens arising out of the Foreign Lease Agreement, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act and with a current and valid Airworthiness Certificate installed on the Aircraft, unless such certificate shall have been suspended or revoked as a result of the suspension or revocation of the registration of the Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft to be registered in the name of Lessor under the Federal Aviation Act (whether by means of a voting trust agreement or otherwise) in which case the Aircraft shall nevertheless meet all conditions for such certification and for the issuance of such certificate; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Aircraft to be operated under, and in full compliance with, such Airworthiness Certificate and Part 121 of the - 88 - 90 regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense with respect to effecting such registration, duly registered in the name of the Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vii) in good and airworthy operating condition, and in the same condition (including, without limitation, in a passenger configuration suitable for passenger revenue service) as when delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (viii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Engines. In the event any engine not owned by Lessor shall be installed on the Aircraft on any Return Occasion, without limiting Lessee's obligations under the Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engines or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engines, assuming the Engines were in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms - 89 - 91 of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens, Liens arising out of the Foreign Lease Agreement and Head Lessor's Liens. (d) Records and Documents. Upon the return of the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Aircraft, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Aircraft and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Aircraft under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Aircraft under the Maintenance Program, in each case as Lessor may reasonably request, and all documentation with respect to the Aircraft set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Aircraft on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Aircraft, Airframe, Engines, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All - 90 - 92 components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an aircraft which has been operating in regulated commercial air service, shall be delivered to Lessor with the Aircraft. Any documents or records required to be delivered hereunder shall be in English. (e) Condition of Aircraft. Upon any Return Occasion, (i) Lessee shall return such Aircraft to Lessor in such condition that the Aircraft shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto and (ii) shall provide that each oil tank on the Aircraft shall be full and the fuel tanks shall contain as much fuel as such tanks contained at the time the Aircraft was accepted by Lessee. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Aircraft available to Lessor at the location where the "block 'C' Check" (or equivalent level designated check or checks) required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding compensation to representatives of Lessor), in order to verify that the condition of such Aircraft complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such "block 'C' Check" (or equivalent level check or checks) and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such "block 'C' Check" is being performed and shall have such duration as to permit the opening of any areas of the Aircraft which are necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Aircraft and shall continue on consecutive days until - 91 - 93 all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(f) hereof, the Term with respect to the Aircraft undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations (including, without limitation, the obligation to pay Rent hereunder) continued, on a daily basis until the Final Inspection shall have been concluded; provided, however, that Lessee shall not be required to pay Rent with respect to the Aircraft during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Aircraft Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Aircraft. (h) Corrections and Subsequent Corrections. To the extent that the Aircraft or any Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as such Aircraft is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of such Aircraft and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of such Aircraft, at commercial rates then charged by the Person selected by Lessor to perform such correction. The Letter of Credit shall not be released and any costs and expenses (including, materials and labor) incurred by Lessor for such correction shall be indemnified by Lessee in favor of Lessor (and prior to the end of the Term, Lessee shall - 92 - 94 make adequate provision to Lessor's satisfaction in respect of such indemnity) and shall become Supplemental Rent payable by Lessee within ten (10) days following the submission of a written statement by Lessor to Lessee, identifying the items corrected and setting forth the expense of such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. (i) Functional Flight Check. Immediately prior to the expiration of the Term, Lessor will be permitted to conduct a non-commercial functional flight check flight of no more than two (2) hours duration in accordance with the Manufacturer's functional flight check procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft and proper functioning of all systems and components. A qualified pilot and up to five (5) other representatives selected by Lessor may take part in such flight to verify compliance of the Aircraft with the requirements of this Lease, provided, that Lessor shall be responsible for the charges of such qualified pilot and representatives. Lessee may combine the functional flight check provided in this Section 16(i) with the delivery flight specified in Section 16(a) and such functional flight check shall include the landing. Any discrepancy or malfunction detected during any functional flight check (including a functional flight check combined with a delivery flight) shall be corrected, at Lessee's expense, and prior to the expiration of the Term. To the extent that any actions to correct any such discrepancy or malfunction extend beyond the Term, the provisions of the first sentence of Section 16(h) shall apply. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee. (j) Export Certificate of Airworthiness. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably request to assist Lessor in obtaining any required documents in relation to the export of the Aircraft from the United States (including, without limitation, a valid and subsisting export certificate of airworthiness with respect to the Aircraft and export license) and in relation to the deregistration of the Aircraft. (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Aircraft which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first - 93 - 95 refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Aircraft for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Aircraft after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Aircraft and the records relating thereto to the extent it does not unreasonably interfere with the operation or maintenance of the Aircraft or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the date on which such payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto (provided that any failure of Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless notice is given by the Owner Participant to Lessee and the Indenture Trustee that such failure shall constitute an Event of Default); or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the - 94 - 96 Aircraft outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Aircraft; or (c) Any representation or warranty made by Lessee in the Operative Documents (other than the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement and the Tax Indemnification Agreement) or in any certificate furnished by Lessee in connection therewith is incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or any other Operative Document (other than the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement, and the Tax Indemnification Agreement), and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c), or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition - 95 - 97 filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of sixty (60) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within sixty (60) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of sixty (60) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act; or - 96 - 98 (j) if the existence, validity, enforceability or priority of the rights or interests of Lessor under this Lease, or the rights or ownership of Lessor of the Aircraft under this Lease in respect of the Aircraft or the rights or interests of Note Holders under the Indenture are challenged by Lessee or any Person claiming by, through or on behalf of Lessee unless Lessee demonstrates that such a claim was not rightfully made by, through or on behalf of Lessee. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to all or any part of the Airframe and any or all of the Engines as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's expense, immediately return the Aircraft to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Aircraft) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Aircraft or any Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if such Aircraft were being returned at the end of the Term hereof with respect to such Aircraft. In addition, Lessor, at its option and to the extent permitted by applicable Law, may enter upon the premises where all or any part of the Aircraft is located to take immediate possession of and, at Lessor's option, remove the same (and/or any engine which is not an Engine but which is installed on the Airframe, subject to the rights of the owner, lessor or secured party thereof) by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry - 97 - 99 or taking of possession whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. (b) Sell or cause to be sold, the Aircraft or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Aircraft, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Aircraft to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Aircraft as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or Renewal Rent Payment Date, an amount equal to the Basic Rent or the Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Aircraft for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as - 98 - 100 a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent for such Aircraft due to and including the date of sale, plus the amount by which the Stipulated Loss Value of such Aircraft, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the Aircraft under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Aircraft, which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for such Aircraft would have expired but for Lessee's default, discounted periodically (equal to installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (f) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Aircraft shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. (g) Proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and - 99 - 101 all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Aircraft in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass-Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's property in repossessing and holding the Aircraft, the Airframe, an Engine or Part, except for direct damages caused by Lessor's gross negligence or willful misconduct, and (iv) shall have the right to maintain possession of and dispose of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Aircraft, the Airframe, an Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or - 100 - 102 otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part and selling or releasing the Aircraft, the airframe, an Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Aircraft, the Airframe, an Engine or Part pursuant to this Section, Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d) or (e) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Aircraft leased hereunder or otherwise to more effectively - 101 - 103 carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Aircraft, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. Section 19. Alienation. (a) Lessor Assignments. In addition, and subject, to the transactions contemplated by Section 19(b), Lessor shall not assign or transfer any interest of Lessor in this Lease and/or the Aircraft and/or the proceeds hereof to any Person except as provided herein, in the Trust Agreement, in the Indenture and in the Refunding Agreement. Any such assignment shall be subject to the condition that the transferee shall agree not to disturb the quiet enjoyment by Lessee of the Aircraft as and to the extent so agreed by Lessor in Section 21(f). (b) Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and perfected security interest in all of Lessor's right, title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee hereby consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in - 102 - 104 any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. Section 20. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Aircraft for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic - 103 - 105 Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, an amount equal to the greater of 120% of the "fair market sales value" of the Aircraft as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to Lessor, semi-annually in advance as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft or any Engine or Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Aircraft - 104 - 106 for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (B) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). Until such time as the Lien of the Indenture is discharged, all notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee at such address as Indenture Trustee may designate from time to time. All notices hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall - 105 - 107 be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft hereunder, and all rents, revenues, profits and income therefrom, in accordance with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it and without interference from any Person making a Claim concerning payment for or the ownership of Buyer Furnished Equipment with respect to the Aircraft, provided, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, - 106 - 108 the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications thereof, or waivers or consents thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the other Operative Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft similarly situated to Lessor. (l) U.S. Registration Number. At Lessee's request, Lessor shall use its best efforts to have the Aircraft registered under the United States Registration Number designated by Lessee. - 107 - 109 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Lessee hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or of any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United States District Court for the Southern District of New York. Lessee represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, Lessee hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee as from time to time may be designated by Lessee in writing to Lessor or Lessee, Foreign Lessor, Owner Participant and Indenture Trustee. Lessee hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Foreign Lessor, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. - 108 - 110 THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all purposes hereof without the necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease as amended and restated - 109 - 111 by this Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] (and as otherwise extended, amended, modified, renewed or supplemented) shall be governed by Article 2-A of the Uniform Commercial Code of New York. - 110 - 112 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by their duly authorized officers as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:__________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:___________________________ Title: - 111 - 113 TABLE OF CONTENTS Page Section 1. Definitions..................................................... 1 Section 2. Agreement to Lease.............................................. 21 Section 3. Delivery and Acceptance; Term; Rental Period............................................... 22 (a) Time of Delivery.................................................. 22 (b) [Intentionally Left Blank]........................................ 22 (c) Acceptance of Aircraft............................................ 22 (d) Term of Lease..................................................... 22 (e) Rental Period..................................................... 22 Section 4. Rent; Minimum Payments.......................................... 22 (a) Rent.............................................................. 22 (b) Minimum Payments.................................................. 23 (c) Date, Place and Method of Payment................................. 23 (d) Prohibition Against Setoff, Counterclaim, Etc....................................... 24 Section 5. Representations, Warranties and Covenants....................... 25 (a) Warranties and Disclaimer of Warranties........................... 25 (b) Representations and Warranties of Lessor.......................... 27 (c) No Amendments to Financing Documents.............................. 27 (d) Suppliers' Warranties............................................. 27 Section 6. Possession and Use.............................................. 28 (a) Possession........................................................ 28 (b) Reciprocal Recognition of Rights.................................. 34 (c) Lawful Insured Operations......................................... 35 (d) Maintenance....................................................... 36 (e) Registration and Insignia......................................... 37 Section 7. Inspection...................................................... 38 Section 8. Additional Covenants of Lessee.................................. 39 (a) Financial Information............................................. 39 (b) Maintenance of Corporate Existence................................ 41 (c) Maintenance of Status............................................. 42 (d) Payment of Taxes.................................................. 42 (e) Consolidation, Merger, Etc........................................ 42 (f) Information....................................................... 43 (g) Place of Business................................................. 44 (h) Certain Limitations on Use........................................ 44 (i) Section 1110...................................................... 45 (j) Permits and Licenses.............................................. 45 (k) Security Opinion; Annual Certificate.............................. 45 (l) Letter of Credit.................................................. 46 (m) ERISA............................................................. 49 (i) 114 Section 9. Replacement of Parts; Alterations, Modifications and Additions................................. 49 (a) Replacement of Parts.............................................. 49 (b) Alterations, Modifications and Additions.......................... 50 (c) Pooling........................................................... 53 Section 10. General Tax Indemnity.......................................... 54 (a) Indemnity......................................................... 54 Section 11. Loss, Damage and Requisition................................... 64 (a) Event of Loss with Respect to the Airframe........................ 64 (b) Event of Loss with Respect to an Engine........................... 66 (c) Conveyance of Replacement Airframe................................ 68 (d) Application of Proceeds and Payments.............................. 70 (e) Requisition for Use by Government with Respect to the Aircraft......................................... 71 (f) Application in Default............................................ 72 Section 12. Insurance...................................................... 72 (a) Public Liability and Property Damage Insurance. ..................................................... 72 (b) Insurance Against Loss or Damage.................................. 74 (c) Application of Insurance Proceeds for an Event of Loss................................................... 77 (d) Application of Insurance Proceeds for Other than an Event of Loss..................................... 78 (e) Application in Default............................................ 78 (f) Certificates...................................................... 79 (g) Reinsurance....................................................... 79 (h) Storage........................................................... 80 (i) Amounts Held...................................................... 80 (j) After the Term.................................................... 81 (k) Governmental Indemnity............................................ 81 Section 13. General Indemnity.............................................. 81 Section 14. Liens.......................................................... 86 Section 15. Protection of Title and Further Assurances................................................. 88 Section 16. Return of Aircraft and Records................................. 89 (a) Return............................................................ 89 (b) Status Upon Return................................................ 90 (c) Engines........................................................... 91 (d) Records and Documents............................................. 91 (e) Condition of Aircraft............................................. 93 (f) Final Inspection.................................................. 93 (g) Aircraft Records and Documents.................................... 94 (h) Corrections and Subsequent Corrections............................ 94 (i) Functional Flight Check........................................... 95 (j) Export Certificate of Airworthiness............................... 95 (ii) 115 (k) Service Bulletin and Modification Kits........................... 95 (l) Storage Upon Return.............................................. 95 (m) Resale/Release Cooperation....................................... 96 Section 17. Events of Default............................................. 96 Section 18. Remedies...................................................... 99 Section 19. Alienation.................................................... 104 (a) Lessor Assignments............................................... 104 (b) Security for Obligations......................................... 104 Section 20. Renewal Option................................................ 105 Section 21. Miscellaneous................................................. 106 (a) Severability, Amendment, and Construction........................ 106 (b) Governing Law.................................................... 107 (c) Notices.......................................................... 107 (d) Lessor's Right to Perform for Lessee............................. 107 (e) Counterparts..................................................... 108 (f) Quiet Enjoyment.................................................. 108 (g) Brokers.......................................................... 108 (h) Investment of Funds.............................................. 109 (i) Entire Agreement; Amendment...................................... 109 (j) Expenses......................................................... 109 (k) Federal Bankruptcy Code.......................................... 110 (l) U.S. Registration Number......................................... 110 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial........................................... 110 (n) Limitation on Recourse........................................... 111 (o) Successor Trustee................................................ 112 (p) Article 2-A of the UCC........................................... 112 ANNEXES ANNEX I - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Aircraft Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 3 (iii) 116 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Assignment of Permitted Sublease (iv) EX-4.24 25 RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-10] 1 EXHIBIT 4.24 THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-10] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE UNDER A SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] DATED AS OF DECEMBER 19, 1989, AMENDED AND RESTATED AS OF OCTOBER 1, 1991, AND FURTHER AMENDED AND RESTATED AS OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF. - ------------------------------------------------------------------------------- SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-10] Dated as of December 19, 1989 Amended and Restated as of October 1, 1991 And Further Amended and Restated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as amended Lessor and AMERICA WEST AIRLINES, INC. Lessee One Airbus A320-231 Aircraft Manufacturer's Serial No. 77 U.S. Registration No. N631AW - ------------------------------------------------------------------------------- 2 SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of December 19, 1989, as amended and restated as of October 1, 1991, and as further amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility ", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as 3 defined in the Pass Through Trust Agreement); and the term "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or cause the direction of the management and policies of a Person whether by contract or otherwise. "Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement d'interet economique formed under the laws of the French Republic, and its successors and assigns. "Aircraft" shall mean the Airframe leased hereunder and described in Lease Supplement No. 1 (or any airframe from time to time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any Engine substituted therefor hereunder) with respect to such Airframe, whether or not any such initial or substituted Engines may from time to time no longer be installed on the Airframe or may be installed on any other airframe, (ii) Parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Aircraft Records and Documents and all other logs, manuals and records with respect to such Aircraft, and (v) all substitutions, replacements and renewals of any and all thereof. "Aircraft Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft (except Engines or engines from time to time installed thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such model aircraft (except Engines or engines from time to time installed thereon) which may from time to time be substituted for such aircraft (except Engines or engines from time to time installed thereon) pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same shall be incorporated or installed on or attached to the Airframe, or so -2- 4 long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from the Airframe; provided, however, that at such time as an aircraft (except Engines or engines from time to time installed thereon) shall be deemed part of the property leased hereunder in substitution for the Airframe pursuant to the applicable provisions hereof and the replacement Airframe shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), the replaced Airframe shall cease to be the Airframe hereunder. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that such Aircraft, Airframe, Engine or Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Aircraft as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien, Head Lessor's -3- 5 Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section 18 in which case only Lessor shall select such appraiser (which appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Aircraft shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to Section 4(a)(i). -4- 6 "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 3. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Buyer Furnished Equipment" shall mean the equipment which was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar equipment furnished to Lessee. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. -5- 7 "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. "Consent and Guaranty" shall mean the Amended and Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated as of December 30, 1988, in the form attached to the Purchase Agreement. "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean December 22, 1989, being the date the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) each of the two IAE Model V2500 engines listed by manufacturer's serial number in Lease Supplement No. 1 and initially installed on the Airframe covered by such Lease Supplement, whether or not from time to time thereafter no longer installed on the Airframe or installed on any other aircraft or airframe, and (ii) any replacement engine which may from time to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for any Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. The term "Engines" means, as of any date of determination, both Engines then leased hereunder. -6- 8 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Aircraft, Airframe or either Engine: (a) the actual or constructive total loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days; (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), -7- 9 prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing on the last day of the Term; or (h) as otherwise provided herein. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe which is a part of such Aircraft. An Event of Loss with respect to an Engine shall not, absent an Event of Loss with respect to the Airframe, be deemed an Event of Loss with respect to the Airframe. "Excluded Property" shall have the meaning set forth in Section 9(b) hereto. "Expiration Date" shall mean the date specified in Lease Supplement No. 3, on which date the Basic Term of this Lease shall expire. "FAA" shall mean the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head Lessee to Lessor. "Federal Aviation Act" shall mean the sections of Title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each -8- 10 Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass-Through Trust Agreement and each supplement thereto and any other agreement, document or certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Aircraft by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, the Aircraft or its operations. "Head Lessor's Lien" shall mean a Lessor's Lien under and as defined in the Original Head Lease. -9- 11 "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture), each Pass-Through Trust, each Pass- Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, and their respective successors and permitted assigns, and any combination thereof and their respective officers, directors, agents, servants, subcontractors, employees, subsidiaries, Affiliates, shareholders and partners. "Indenture" shall mean the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of December 19, 1989, amended and restated as of October 1, 1991, and further amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture, computed on the basis of a year of 360 days and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or -10- 12 other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement No. 2, Lease Supplement No. 3 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989 BN-10] No. 1 dated December 22, 1989 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989 BN-10] No. 2 dated October 24, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989 BN-10] No. 3, substantially in the form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Aircraft hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims (as defined herein) against Indenture Trustee in its individual capacity (and not as Indenture Trustee) not related to its interest in the Aircraft or the -11- 13 administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Aircraft, the Airframe, any Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax -12- 14 Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Aircraft, the Airframe, either Engine, the Trust Estate or the Operative Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except Liens resulting from a transfer not permitted by such Section ) or 20 of this Lease or pursuant to Sections 10 and 11 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other maintenance program for the Aircraft which is approved by the aviation authority of the country of registry and complies with the requirements applicable to maintenance of the Aircraft contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Airframe, Engines, and components of the Aircraft, including, but not limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved -13- 15 modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean, collectively, Manufacturer's Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be applicable in any given circumstance, together in each case with any subcontractor or supplier thereof. "Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French societe a responsabilite limitee, which as of the date hereof is owned by Airbus Industrie. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, the Tax Indemnification Agreement, the Financing Documents, that certain letter agreement dated as of the Restatement Date, relating to Stipulated Loss Values with respect to this Lease, and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Aircraft Lease Agreement [GPA 1989 BN-10], with respect to the Aircraft, dated as of December 19, 1989, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of December 19, 1989, -14- 16 and amended and restated as of October 1, 1991, and amended and restated as of the Restatement Date, between the Original Head Lessee and Owner Participant, as the same may be amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a Connecticut corporation. "Owner Participant" shall mean ________________ ____, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Partial Assignment" shall mean the A320 Partial Assignment, Assumption, Release and Amendment Agreement, dated as of December 30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified. "Participation Agreement" shall mean the Participation Agreement [GPA 1989 BN-10], dated as of December 19, 1989 and amended as of October 1, 1991, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the Lenders named therein, as amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (excluding complete Engines or engines), including Buyer Furnished Equipment, which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Airframe or any Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Airframe or Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for -15- 17 a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America which has agreed (in form and substance satisfactory to Lessor) that all of its indemnity obligations which by the terms of this Lease are permitted in lieu of insurance shall be enforceable by and payable to Lessor directly or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee, which approval shall not be unreasonably withheld. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Amended and Restated Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as partially assigned to Parent pursuant to the Partial Assignment, to which Airbus Industrie, as guarantor, has consented, and as the same may from time to time be further amended, supplemented or otherwise modified to the extent permitted by the terms thereof. "Purchase Documents" shall mean the Purchase Agreement, the Partial Assignment and any other agreement, -16- 18 document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Renewal Rent becomes payable. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Airframe" and "Replacement Engine" shall have the meanings specified in accordance with their description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. "Return Occasion" shall mean the event that occurs when possession of the Aircraft is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding -17- 19 $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20(ii) (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Airframe or such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth on, Exhibit A hereto. -18- 20 "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of the need to correct any failure of the Aircraft to satisfy the requirements of Section 16 hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) Lessor's pro rata share of any payment due to any Pass-Through Trustee in respect of fees or expenses pursuant to the Pass-Through Trust Agreement; (viii) Lessor's pro rata share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement and/or the Refunding Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate (all computations of interest under this Lease to be made on the basis of a 360-day year, as applicable, and twelve 30-day months) calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, as the case may be, not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Lessor's pro rata share" means as of any date of determination a fraction the numerator of which is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of December 19, 1989, as amended and restated as of October 1, 1991, and as amended and restated as of the Restatement Date, between Original Head -19- 21 Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20, the Renewal Term, for which the Aircraft is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989 as amended by Trust Supplement No. 1, as further amended by Trust Supplement No. 2 and as further amended by Trust Supplement No. 3, between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include the Trust Supplements. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1, Trust Supplement No. 2, Trust Supplement No. 3 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1989 BN-10] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1989 BN-10] No. 2 dated October 24, 1991 between Lessor and Owner Participant. -20- 22 "Trust Supplement No. 3" shall mean Trust Agreement Supplement [GPA 1989 BN-10] No. 3 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Aircraft or the Airframe and Engine or engines installed thereon at that time to a third party pursuant to which such Aircraft or the Airframe and Engine or engines (i) shall be operated solely by regular employees of Lessee (or any Permitted Sublessee) possessing all current certificates and licenses required under the Federal Aviation Act or, if the Aircraft is not registered under the Federal Aviation Act, all certificates and licenses required by the laws of the jurisdiction of registry (it is understood that cabin attendants need not be regular employees of Lessee (or any Permitted Sublessee)) and Lessee (or any Permitted Sublessee) otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee (or any Permitted Sublessee) in accordance with its normal maintenance practices and this Lease, and otherwise the insurance required hereunder shall be maintained and the Aircraft shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term; Rental Period. (a) Time of Delivery. The Aircraft was delivered to Lessee, and Lessee accepted delivery of the Aircraft, on December 22, 1989. (b) [Intentionally Left Blank.] (c) Acceptance of Aircraft. The Aircraft leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. -21- 23 Lessee hereby agrees that it has accepted the Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. (e) Rental Period. Lessor and Lessee agree that the period between each Basic Rent Payment Date shall constitute a rental period for purposes of Section 467 of the Code. Section 4. Rent; Minimum Payments. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in advance and allocable to the rental period beginning on such date, as set forth on Schedule I to Exhibit C, due and payable on each Basic Rent Payment Date; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable within fifteen (15) days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all -22- 24 accrued and unpaid interest (assuming interest has been timely paid) thereon and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Head Lessor's Lien or any Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in The City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except that all Excepted Payments, and upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address in The City of New York as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are -23- 25 absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft (subject to the provisions of Section 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any Permitted Sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. -24- 26 Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR BY ONE OF ITS AFFILIATES HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND LESSOR HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A -25- 27 PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: Lessor represents and warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has, the right to lease the Aircraft hereunder, (y) on the Delivery Date the Aircraft was, and on the Restatement Date the Aircraft is, free of Lessor's Liens and Head Lessor's Liens, and (z) on the Restatement Date Lessor has such title to the Aircraft as was transferred to it on the Delivery Date and (B) Lessor covenants that it shall maintain such title to the Aircraft as was transferred to it on the Delivery Date and shall not -26- 28 create, incur, assume or suffer to exist any Lessor's Lien or Head Lessor's Lien on the Aircraft. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Delivery Date and as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of this Lease and the delivery of the Aircraft and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Aircraft continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or airframe or propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect thereto under the Purchase Agreement (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Aircraft), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining -27- 29 interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or either of the Engines or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject any Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that no transfer of the registration of any Engine shall be effected in connection therewith; and provided, further, that (A) no such agreement or arrangement contemplates, results in or requires the transfer of title to any Engine, and (B) if Lessor's title to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to -28- 30 such Engine and not an Event of Default and Lessee shall comply with Section 11(b) hereof in respect thereof; (2) deliver possession of the Aircraft, the Airframe or any Engine to the manufacturer thereof, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on such Aircraft, Airframe or Engine or any part thereof or for alterations or modifications in or additions to such Aircraft, Airframe or Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Aircraft or the Airframe to the United States of America or any instrumentality or agency thereof pursuant to a sublease; (4) (i) subject the Airframe to the Civil Reserve Air Fleet Program and transfer possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; or (ii) subject the Airframe to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install an Engine on an airframe (other than the Airframe) owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under -29- 31 normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or engines installed thereon; (6) install an Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that each Engine leased to Lessee hereby shall not become subject to the lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of such Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the owner of such Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install an Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine and Lessee shall comply with Section 11(b) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in such Engine under applicable law until compliance by Lessee with such Section 11(b); -30- 32 (8) enter into a Wet Lease for the Aircraft or the Airframe and engines installed thereon in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee (or any Permitted Sublessee) shall enter into any Wet Lease for a period of more than one year (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given prior to entering into such Wet Lease, if practicable, but in any event promptly after entering into such Wet Lease); or (9) sublease the Aircraft or the Airframe to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section 6(a) hereof (other than the transfer of an Engine which is deemed to have been an Event of Loss) shall be expressly subject and subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); -31- 33 (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); and (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Aircraft or the Airframe to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession -32- 34 of the Aircraft in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Aircraft by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Aircraft, to the registry of the Aircraft in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction; and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. The rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily -33- 35 liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or constitute a waiver of Lessor's rights or remedies hereunder. Any Permitted Sublease shall expressly prohibit any further sub-sublease by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with a Foreign Air Carrier and, if practicable, not later than five days prior to entering into any Permitted Sublease with any other proposed Permitted Sublessee, but, in the case of a Permitted Sublease with a Permitted Sublessee other than a Foreign Air Carrier, in any event promptly after entering to any such Permitted Sublease) and (ii) a copy of each Permitted Sublease which has a term of more than three months. (b) Reciprocal Recognition of Rights. In the event the lessor or secured party of any airframe leased to Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or other security agreement in accordance with Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement covering such airframe also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement, Lessor hereby agrees for the benefit of such lessor or secured party that Lessor will not acquire or claim, as against such lessor or secured party, any right, title or interest in any such engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease or conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. Lessor also hereby agrees for the benefit of the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as against such mortgagee, any right, title or interest in any engine subject to the lien of such mortgage as the result of such engine being installed on the Airframe at any time while such engine is subject to the lien of such mortgage. -34- 36 (c) Lawful Insured Operations. Lessee will not permit the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, such of any manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the Aircraft is registered with the FAA, or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Aircraft or impair the interest of Lessor therein or impair the validity or priority of the Lien of the Indenture or result in a risk of criminal liability of Lessor or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Aircraft during the Basic Term or then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Aircraft, or suffer or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such -35- 37 insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by Lessee without discrimination and as if Lessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by, the central civil aviation authority of the country of registry and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such condition as is necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times -36- 38 under the Federal Aviation Act, or the applicable laws of any other jurisdiction in which the Aircraft may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the Aircraft at all times, at its expense, to be duly registered during the Restricted Use Period and, subject to Section 11 of the Refunding Agreement, thereafter under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as (i) while the Aircraft is registered under the Federal Aviation Act, each of the Lessor or its successors or assigns is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not register the Aircraft or permit the Aircraft to be registered under any laws other than the Federal Aviation Act at any time except as provided in Section 11 of the Refunding Agreement and shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Aircraft and this Lease at all times. At any time after the Restricted Use Period, Lessor, upon compliance with all of the terms of Section 11 of the Refunding Agreement, shall, at the request and sole expense of Lessee, cooperate with Lessee to take all actions reasonably required to change the registration of the Aircraft to another country. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") in the cockpit of the Aircraft and on each Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a location reasonably adjacent to and not less prominent than the airworthiness certificate for the Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set -37- 39 forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Aircraft or either Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Airframe and Engines to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause its Permitted Sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee on reasonable prior notice at reasonable times to visit, inspect and survey the Aircraft (including, without limitation, going on board the Aircraft, and inspecting the Aircraft during maintenance checks when panels and bays are open and subject to view), its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as Lessor does not believe a Default or Event of Default has occurred hereunder inspections shall be performed during regularly scheduled maintenance checks of the Aircraft. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Airframe or any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. -38- 40 Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; -39- 41 (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Aircraft, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) within fifteen (15) days following the end of each calendar month throughout the Term, an Airframe and Engine status report, substantially in the form of Exhibit K hereto, including, without limitation, (A) a summation of hours and cycles accumulated on the Airframe and Engines by individual serial number during such preceding calendar month and (B) the identity of the airframe (including the "N" number and, at Lessor's request, ownership and lien interests in respect thereof) on which each Engine was installed as of the end of each such calendar month, and, if Lessor so requests, the location of any such airframe. The foregoing shall not be deemed to require reports regarding hours or cycles on any Parts; (vi) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vii) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Aircraft, either Engine or any Part with a repair or replacement cost (including labor charges) in excess of $1,000,000 or any incident required to be reported to the FAA or other Government Entity; (viii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and -40- 42 (ix) promptly after Lessor's written request therefor, notice of the time and location of upcoming C Checks, major Engine checks, major Airframe structural checks and a description of modification of the Aircraft required by an FAA airworthiness directive, a mandatory manufacturer service bulletin or any other modification with a materials and labor cost in excess of $1,000,000; (x) together with each delivery of financial statements pursuant to Section 8(a)(ii) above, a certificate signed by Lessee's auditors thereon (i) briefly setting forth the scope of their examination (which shall include a review of this Section , (ii) stating whether or not their examination has disclosed the existence, during the fiscal year covered by such financial statements, of any Default or Event of Default and, if their examination has disclosed such a Default or Event of Default, specifying the nature and period of existence thereof, and (iii) stating that they have examined the officer's certificate delivered therewith pursuant to Section 8(a)(vi) above; (xi) As soon as possible and in any event within thirty (30) days after Lessee knows or has reason to know thereof, a certificate of a Responsible Officer specifying: (X) the occurrence or expected occurrence of any Reportable Event with respect to any Plan; or (Y) the institution of proceedings or the taking or expected taking of other action by PBGC or Lessee or any Commonly Controlled Person to terminate, withdraw or partially withdraw from any Plan and with respect to a multi-employer Plan, the reorganization or insolvency of the Plan and in addition to such notice, deliver to Lessor whichever of the following may be applicable: (A) a certificate of a Responsible Officer setting forth details as to such Reportable Event of the action that Lessee or Commonly Controlled Person proposes to take with respect thereto, together with a copy of any notice of such Reportable Event that may be required to be filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent to institute such proceedings or any notice to PBGC that such plan is to be terminated, as the case may be; and (xii) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this -41- 43 Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Aircraft, the Airframe or either Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets to, or, without the prior consent of Owner Participant, acquire all or any substantial part of the property or other assets or capital stock of (if such acquisition is analogous in purpose or effect to a consolidation or merger), any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all -42- 44 or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Aircraft as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its federal and state income tax returns (or to permit the filing of the federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or -43- 45 defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Aircraft, the Airframe or the Engines. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Aircraft, Airframe or Engines only in commercial passenger operations and related cargo operations. Unless Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the Aircraft, Airframe or Engines to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code. Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft to be operated in any member state of the European Union or other European country, Lessee shall deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all aircraft (including, without limitation,the Aircraft) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this Second Amended and Restated Aircraft Lease Agreement unless it had available to it the benefits of a Lessor under Section 1110 of Title 11 of the -44- 46 United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Aircraft hereunder. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Aircraft, the Airframe, any Engine or Part or the execution, delivery or performance of this Lease and the Operative Documents to which it is a party by Lessee or the enforcement thereof against Lessee. (k) Security Opinion; Annual Certificate. (i) During such times that the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as -45- 47 reflects the then-current applicable Law, reciting the details of such actions; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Aircraft is registered under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement and any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (iii) Whether the Aircraft is registered under the Federal Aviation Act or under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor annually a certificate (reasonably satisfactory to Lessor) signed by a Responsible Officer of the Lessee certifying that Lessee is in compliance with the provisions of the penultimate paragraph of Section 9(b) regarding Excluded Property and any equipment or seats which such Excluded Property replaces. (l) Letter of Credit. (X) As security for its obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal -46- 48 provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount") which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on first demand by Lessor at any time, if accompanied by its statement (i) that a Default under Section 17(e), (f) or (g) or an Event of Default has occurred or (ii) that the letter of credit will expire within twenty (20) days from the date of demand, which amount may be applied, retained or utilized as provided in clause (Y); (ii) be maintained in full force and effect at all times until ninety-one (91) days after the end of the Term with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five (5) Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that a Letter of Credit in the form set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long-term unsecured debt rating at least equal to its rating on the date hereof; (iii) be expressly designated as transferable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term, then Lessor shall return the Letter of Credit to Lessee or terminate it. (Y) If an Event of Default has occurred and is continuing, in addition to any other rights or remedies Lessor may have hereunder, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to draw on the Letter of Credit and, with respect to amounts so drawn, hold same as security for Lessee's obligations under this Lease, retain same for its own account and apply (including, without limitation, by way of set off against) same, or such amounts thereof as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease), to remedy any breach by Lessee of this Lease and the other Operative Documents or to -47- 49 recompense Lessor for any loss, damage, cost or expense or other Claim due or owing hereunder; provided, however, that in the case of any drawing in respect of any claim for payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts ("Equity Amounts") which would (absent an Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders). If Lessor draws on the Letter of Credit because the Letter of Credit will expire within twenty (20) days from the date of demand, then Lessor may elect in its sole and absolute discretion to apply such amounts in satisfaction of any Equity Amounts which would have been or would become distributable under the Indenture to Lessor or Owner Participant if Lessee were fully to perform its obligations under the Lease on a timely basis in the inverse order of which such obligations would be distributable; and provided further, that the amount of Lessee's obligations in respect of Equity Amounts that shall be satisfied by such application shall equal (i) that amount from the proceeds of the Letter of Credit which this Lessor elects to apply (the "Applied Amount") in satisfaction of Lessee's obligations in respect of Equity Amounts (such obligations to be satisfied by application of the Applied Amount being referred to as the "Satisfied Obligations") plus (ii) an amount equal to interest at the Applicable Rate on the Applied Amount from the date of application of the Applied Amount to the date on which the Satisfied Obligations otherwise would have been due (with "Applicable Rate" meaning a per annum rate of interest computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed equal to the rate for U.S. Treasury bills with a maturity that most closely corresponds to the remaining Term, it being agreed that in no event shall the Applicable Rate exceed the lowest Debt Rate (as defined in the Indenture) provided in any Equipment Note). Lessee shall not be obligated to reinstate the amount of the Letter of Credit to the extent proceeds thereof are applied in satisfaction of Lessee's obligations in the manner provided in the immediately preceding proviso. If (a) the Lessor shall hold any proceeds of the Letter of Credit as security for Lessee's obligations to Lessor a Letter of Credit with a face amount available for drawdown in an amount equal to the amount of the proceeds so held by Lessor and otherwise meeting the requirements of this Section 8(1), Lessor shall pay such proceeds to Lessee for Lessee's own account. -48- 50 (m) ERISA. Lessee will not, nor will it permit any of its subsidiaries to, (a) terminate, within the meaning of Title IV of ERISA, any Plan so as to result in any material liability to the PBGC, (b) engage in any "prohibited transaction" (as defined in Section 4975 of the Code) involving any Plan that would result in material liability for an excise tax or civil penalty in connection therewith, (c) incur or suffer to exist any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, involving any Plan, or (d) allow or suffer to exist any event or condition with respect to ERISA, which would be likely to have a material adverse effect on Lessee's condition (financial or otherwise), business, operations or prospects or on Lessor's interests, rights or remedies. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). All Parts which are at any time removed from the Aircraft shall remain the property of Lessor, subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Aircraft and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Aircraft as above provided, or as provided in Section -49- 51 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine to the extent made mandatory for Lessee in respect of the Aircraft, Engines or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Airframe, Engines or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Airframe, either Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Airframe, Engines and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Aircraft as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Aircraft on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or -50- 52 added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Aircraft without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Aircraft would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Aircraft (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Aircraft, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Aircraft in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Aircraft as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which -51- 53 is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Aircraft. Notwithstanding any other provision hereof, and without limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted Sublessee) may install in the Aircraft audio visual, entertainment or telephonic equipment (including seats with such equipment installed therein) (any or all of which are hereafter referred to as "Excluded Property") in the ordinary course of business, and Lessor shall not claim or acquire title thereto and the rights of the owners thereof therein shall not constitute a default hereunder; provided that (i) any such Excluded Property shall be removed prior to the date of a Return Occasion without causing any damage to the Aircraft and without diminishing or impairing the value, utility, remaining useful life or condition which the Aircraft would have had at such time had such Excluded Property not been installed, (ii) any equipment or seats which such Excluded Property replaces shall be properly stored with the interests of Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee or warehouse, and properly reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are required as a result of such removal and/or reinstallation. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Aircraft, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Airframe or either Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted -52- 54 Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided the Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such -53- 55 amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture provided that this limitation on the gross-up shall be without derogation to Lessor's right to be indemnified pursuant to the remainder of this Section 10. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee; provided that in any circumstance in which the Lessor is required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or otherwise, by any Federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a "Taxing Authority"): -54- 56 (i) upon or with respect to, based upon or measured by (A) the Aircraft, the Airframe, any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re-registration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to, the Equipment Notes, whether as originally issued or pursuant to any refinancing, modification or reissuance or any other obligation evidencing any new loan, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. -55- 57 (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, any Taxes imposed by the Federal government of the United States of America upon or with respect to, based on or measured by, the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (other than Taxes included in the calculation of an after-tax payment, or Taxes in the nature of sales or use Taxes, license Taxes, value-added Taxes or property Taxes), (ii) In the case of any Indemnitee, Taxes on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any foreign, state or local government or taxing authority (other than Taxes included in the calculation of an after-tax payment, Taxes in the nature of sales Taxes, use Taxes, property Taxes, value-added Taxes or rental Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which are the direct result of gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee (other than, in the case of Owner Trustee, as a result of the occurrence of an Event of Default) or any voluntary sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (x) the transactions contemplated or effected by the Refunding Agreement and the amendments to the Lease occurring in connection therewith, (y) an Event of Default and the exercise by any Indemnitee of its remedies under the Lease or the -56- 58 Indenture, as the case may be, and (z) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms of the Lease; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed as a result of a transferee of such Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any Part or any interest in the Operative Documents being a foreign entity or not having its principal office in the United States, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this Section 10 or to a failure by Lessee to satisfy its obligations related to such return, (vii) Taxes imposed on an Indemnitee as a result of a breach of its representations, warranties or covenants contained in Sections 9(a), 9(b)(11), 9(c), 9(d), 9(e), 10, 12 or 16 of the Refunding Agreement or Section 21 (f) of this Agreement in any material respect or from a failure by an Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Aircraft, (ix) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents, and (x) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts, the -57- 59 Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) any Tax based on or measured by gross or net income, capital or net worth, franchises, excess profits or conduct of business imposed on an Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction (other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents); and (ii) a Tax imposed by any Taxing Authority other than the Federal government of the United States of America based on, or measured by gross income or receipts, to the extent such Tax is attributable to the operation or registration of the Aircraft in such jurisdiction or to the transactions contemplated by the Operative Documents or is the result of the activities of Lessee or any Affiliate of either thereof in such jurisdiction, including residence. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to Owner Trustee and Owner Participant or will notify Owner Trustee or Owner Participant of such requirement and make such report or return in such manner as shall be reasonably satisfactory to Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the -58- 60 Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of federal income taxes imposed on Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest federal corporate income tax rate applicable to Owner Participant in the year of payment. (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (A) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (B) the actual reduction in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (A) above would exceed (x) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount -59- 61 paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (y) the portion of all prior payments computed pursuant to (A) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. If reasonably requested by Lessee in writing, an Indemnitee shall upon receipt of an indemnity reasonably satisfactory to it and at the sole expense of Lessee (including, without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayments of estimated Taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interest) in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be -60- 62 conducted in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, that, in each such instance, such proceedings do not involve any substantial risk or danger of the sale, forfeiture or loss of the Aircraft, and provided further that the Indemnitee shall have the right to forego administrative proceedings with respect to the claim and contest the claim in an appropriate court of its choosing and provided further that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) no Event of Default has occurred and is continuing, (ii) the amount of such Taxes shall be at least $50,000, (iii) in the event an administrative proceeding is to be appealed in a judicial proceeding, as for the first level of judicial proceeding, Lessee shall have provided the Indemnitee with an opinion of legal counsel selected by the Indemnitee and reasonably acceptable to Lessee ("Tax Counsel") to the effect that a reasonable basis exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), (iv) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, Lessee shall have advanced or caused to be advanced to such Indemnitee sufficient funds (on an interest-free basis) to make such payments and shall have agreed to indemnify such Indemnitee against any adverse tax consequences of such advance, and (v) in the event a judicial decision is to be appealed, the amount of such Taxes is at least $150,000 and the Indemnitee shall have received an opinion of Tax Counsel (which opinion shall be obtained at Lessee's sole expense) to the effect that it is more likely than not that the Indemnitee will prevail, and -61- 63 in the event that the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of Tax Counsel, which opinion shall be obtained at Lessee's sole expense, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which such Indemnitee or Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of a statutory change in law, it is as likely as not that the position will prevail. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released from its responsibility to contest such claim, or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to -62- 64 be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include such affiliated group. Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Airframe. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Airframe or the Airframe and any Engines then installed thereon, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Airframe and such Engines then installed thereon, title to a replacement Airframe (together with the same number of replacement Engines as the Engines), such replacement Airframe and Engines (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe and replacement Engines may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure -63- 65 as provided in Section 11(c) hereof, at least equal to, and to be in at least as good operating condition as, the Airframe and the Engines, if any, so replaced (assuming the Airframe and the Engines were maintained in accordance with the requirements of this Agreement, whether or not they are in fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with equivalent or better modification status and, in the case of Engines, in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens and Head Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and the Engines suffering the Event of Loss as well as all of Lessor's right, title and interest in and to any Engine constituting part of the Aircraft and replaced as provided above but not installed thereon at the time of the Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed part of the property leased hereunder and shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in replacement of the Airframe or Engines under this Section 11(a)(i) shall result in any reduction of Rent. (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee (but in no event later than the last day of the Term) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable -64- 66 by Lessee on such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens and Head Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and Engines suffering the Event of Loss, as well as all of Lessor's right, title and interest, if any, in and to any Engine constituting part of the Aircraft but not installed thereon at the time of the Event of Loss. (b) Event of Loss with Respect to an Engine. Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence (but in no event later than the last day of the Term) convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine and is suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, free of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Lessor and Indenture Trustee, as applicable, -65- 67 with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant, Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens), and is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish Owner Participant, at -66- 68 Lessee's election, (x) an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant or (y) an indemnity for any adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens and Head Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein and shall be deemed part of the same Aircraft as was the Engine replaced thereof. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Conveyance of Replacement Airframe. Prior to or at the time of any conveyance of a replacement Airframe pursuant to Section 11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the following documents which shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect on said date: (i) a full warranty bill of sale, in form and substance satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be approved by the FAA on said date), executed by the owner thereof, in favor of Lessor and, cause supplements, reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), to this Lease, the Indenture (if then in effect) and the Trust Agreement (if then in effect), with respect to such replacement Airframe and to be duly filed for recordation pursuant to the Federal Aviation Act or other applicable Governmental Entity; (ii) the certificate specified in Section 12(f) hereof demonstrating compliance with the insurance requirements of Section 12 with respect to the replacement Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such other evidence of title as Owner Participant or Indenture Trustee (if the Lien -67- 69 of the Indenture has not been discharged) may reasonably request) to the effect that, upon such conveyance, Lessor will acquire good title to such replacement Airframe free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe may be subject to Permitted Liens), that such replacement Airframe will be leased hereunder to the same extent as the Airframe replaced thereby and will be subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and Replacement Engine and the Lien of the Indenture on such Replacement Airframe and Replacement Engine; and that Lessor and Indenture Trustee, as the assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement airframe and engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement; (iv) a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (v) such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(c), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(c), in each case in form and substance satisfactory to each such party, including evidence that the Aircraft of which the replacement Airframe is a part has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of this Lease and application for registration of such replacement Airframe in the name of Lessor has been duly made with the FAA or other applicable Governmental Entity and Lessee has temporary or permanent authority to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code financing statements covering the replacement Airframe as may be requested by Lessor or Indenture Trustee, (vii) furnish Owner Participant with an -68- 70 opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal prepared in accordance with the Appraisal Procedure which confirms that the replacement Airframe and any replacement Engine has a value, utility and remaining useful life at least equal to that of the Airframe and Engines which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of this Lease whether or not they are in fact so maintained and (ix) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe is free and clear of Lessor's Liens and Head Lessor's Liens), all of Lessor's right, title and interest in and to the Aircraft which suffered the Event of Loss. No Event of Loss with respect to the Aircraft under the circumstances contemplated by the terms of this Section 11(c) shall result in any reduction in Rent. For all purposes of this Lease, each such replacement Aircraft (together with any Engines constituting part of the Aircraft being replaced as to which an Event of Loss has not occurred) shall be deemed part of the property leased hereunder and shall be deemed the "Aircraft" as defined herein. (d) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other than insurance proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value if -69- 71 not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (e) Requisition for Use by Government with Respect to the Aircraft. Subject to Section 11(f) below, in the event of the requisition for use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other than a requisition constituting an Event of Loss), Lessee shall promptly notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) thereof and all of Lessee's obligations under this Lease with respect to such Airframe or Engine shall continue to the same extent as if such requisition had not occurred. All payments received by Lessor or Lessee from the Governmental Entity for the use of such Airframe or Engine during the Term shall be paid over to, or retained by, Lessee if no Default or Event of Default shall have occurred and be continuing; and all other payments received by Lessor or Lessee from the Governmental Entity shall be paid over to, or retained by, Lessor. If the Airframe and such Engines or engines are not returned by the end of the Term, an Event of Loss shall be deemed to have occurred on the last day of the Term and, on the last day of the Term, Lessee shall either pay to Lessor the amount provided herein for an Event of Loss to the Airframe and such Engines or engines on such date or provide a replacement Aircraft and Engine on such date in the condition provided for in Section 16. In the event of the requisition for use by the Governmental Entity of any Engine without the requisition for use of the Airframe, Lessee will replace such Engine hereunder by complying with the terms of Section 11(b) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental -70- 72 Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (f) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Aircraft, in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their -71- 73 respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured of any breach or violation by Lessee or any other insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war risk and allied perils coverage), after notice to Lessor, Owner Participant, Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse provided, however, that if any such notice period is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable, (iv) shall include coverage for any country in or over which the Aircraft is located or operated, and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, or the other Indemnitees, or their respective permitted assigns, with respect to the Aircraft. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies -72- 74 shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the consent of Lessee) covering the Aircraft, and "all-risk" coverage including transit insurance with respect to Engines and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull insurance reasonably acceptable to Lessor with Approved Insurers if the Aircraft, Airframe or Engines are operated on routes or kept in locations outside of the United States of America. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly-sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, -73- 75 repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged. Anything herein to the contrary notwithstanding, at all times while the Aircraft is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Aircraft. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Aircraft, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war -74- 76 risks or allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse provided, however, that if any such notice period is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable, (iv) shall include coverage for any country in or over which the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Aircraft, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee, as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in -75- 77 addition to that required to be carried by Lessee as provided herein. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its payment of such Stipulated Loss Value and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. -76- 78 (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. -77- 79 (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Aircraft and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Aircraft complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is customarily available at the time in the case of any war risk and allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance; provided, however, that if any such notice period is not reasonably obtainable, such Approved Broker shall provide for as long a period of prior notice as shall then be reasonably obtainable. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris if the relevant primary insurer shall have obtained reinsurance and such reinsurance will (i) be on the same terms as the original insurance and will include the provisions required by this Agreement, (ii) provide in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contain a -78- 80 "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] dated as of December 19, 1989 as amended and restated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for passenger aircraft of similar size as the Aircraft in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of -79- 81 the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on an after-tax basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims, damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee from (and including) and after the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Aircraft to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations thereunder or to file the documentation necessary to continue FAA registration of the Aircraft), delivery, non-delivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, return, financing, Liens (excluding Lessor's Liens, Head Lessor's -80- 82 Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such defect shall be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement -81- 83 (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien or an Original Head Lessee's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way -82- 84 connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, either in the air or on the ground, or which may be caused by any defect in such Aircraft, Airframe, Engine, engine or Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of the location of such Aircraft at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to -83- 85 Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition, (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in -84- 86 excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee has the right to control the defense thereof is materially prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section . Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Aircraft or of the residual value of the Aircraft. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any -85- 87 Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Lessor's Liens, Head Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. -86- 88 Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement, the Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor, cause any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease, and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change -87- 89 in the ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Aircraft or Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Lessee's obligations under this Section 15 are subject to the reasonable cooperation of the applicable parties. Section 16. Return of Aircraft and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Aircraft to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States -88- 90 selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree, fully equipped with all required Engines, or other engines owned by Lessee (which shall thereupon become Engines as hereinafter provided) meeting the conditions specified in this Section and Exhibit E, duly installed thereon by delivering the same to the Lessor at such location. Lessee shall comply with Section 11(b) and this Section 16 with respect to any engines installed on the Aircraft returned to Lessor hereunder and meeting the conditions described herein which were not originally installed on the Aircraft. (b) Status Upon Return. Upon any Return Occasion hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Original Head Lessee's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act and with a current and valid Airworthiness Certificate installed on the Aircraft, unless such certificate shall have been suspended or revoked as a result of the suspension or revocation of the registration of the Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft to be registered in the name of Lessor under the Federal Aviation Act (whether by means of a voting trust agreement or otherwise) in which case the Aircraft shall nevertheless meet all conditions for such certification and for the issuance of such certificate; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Aircraft to be operated under, and in full compliance with, such Airworthiness Certificate and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense with respect to effecting such registration, duly registered in the name of the Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or -89- 91 before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vii) in good and airworthy operating condition, and in the same condition (including, without limitation, in a passenger configuration suitable for passenger revenue service) as when delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (viii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Engines. In the event any engine not owned by Lessor shall be installed on the Aircraft on any Return Occasion, without limiting Lessee's obligations under the Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engines or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engines, assuming the Engines were in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens and Head Lessor's Liens. (d) Records and Documents. Upon the return of the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Aircraft, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, -90- 92 together with a detailed description of the Maintenance Program then applied to the Aircraft and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Aircraft under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Aircraft under the Maintenance Program, in each case as Lessor may reasonably request, and all documentation with respect to the Aircraft set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Aircraft on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Aircraft, Airframe, Engines, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an aircraft -91- 93 which has been operating in regulated commercial air service, shall be delivered to Lessor with the Aircraft. Any documents or records required to be delivered hereunder shall be in English. (e) Condition of Aircraft. Upon any Return Occasion, (i) Lessee shall return such Aircraft to Lessor in such condition that the Aircraft shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto and (ii) shall provide that each oil tank on the Aircraft shall be full and the fuel tanks shall contain as much fuel as such tanks contained at the time the Aircraft was accepted by Lessee. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Aircraft available to Lessor at the location where the "block 'C' Check" (or equivalent level designated check or checks) required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding compensation to representatives of Lessor), in order to verify that the condition of such Aircraft complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such "block 'C' Check" (or equivalent level check or checks) and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such "block 'C' Check" is being performed and shall have such duration as to permit the opening of any areas of the Aircraft which are necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Aircraft and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(f) hereof, the Term with respect to the Aircraft undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations (including, without limitation, the obligation to pay Rent hereunder) continued, on a daily basis until the Final Inspection shall have been -92- 94 concluded; provided, however, that Lessee shall not be required to pay Rent with respect to the Aircraft during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Aircraft Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Aircraft. (h) Corrections and Subsequent Corrections. To the extent that the Aircraft or any Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as such Aircraft is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of such Aircraft and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of such Aircraft, at commercial rates then charged by the Person selected by Lessor to perform such correction. The Letter of Credit shall not be released and any costs and expenses (including, materials and labor) incurred by Lessor for such correction shall be indemnified by Lessee in favor of Lessor (and prior to the end of the Term, Lessee shall make adequate provision to Lessor's satisfaction in respect of such indemnity) and shall become Supplemental Rent payable by Lessee within ten (10) days following the submission of a written statement by Lessor to Lessee, identifying the items corrected and setting forth the expense of such correction. Lessee's obligations to pay -93- 95 such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. (i) Functional Flight Check. Immediately prior to the expiration of the Term, Lessor will be permitted to conduct a non-commercial functional flight check flight of no more than two (2) hours duration in accordance with the Manufacturer's functional flight check procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft and proper functioning of all systems and components. A qualified pilot and up to five (5) other representatives selected by Lessor may take part in such flight to verify compliance of the Aircraft with the requirements of this Lease, provided, that Lessor shall be responsible for the charges of such qualified pilot and representatives. Lessee may combine the functional flight check provided in this Section 16(i) with the delivery flight specified in Section 16(a) and such functional flight check shall include the landing. Any discrepancy or malfunction detected during any functional flight check (including a functional flight check combined with a delivery flight) shall be corrected, at Lessee's expense, and prior to the expiration of the Term. To the extent that any actions to correct any such discrepancy or malfunction extend beyond the Term, the provisions of the first sentence of Section 16(h) shall apply. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee. (j) Export Certificate of Airworthiness. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably request to assist Lessor in obtaining any required documents in relation to the export of the Aircraft from the United States (including, without limitation, a valid and subsisting export certificate of airworthiness with respect to the Aircraft and export license) and in relation to the deregistration of the Aircraft. (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Aircraft which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. -94- 96 (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Aircraft for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Aircraft after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Aircraft and the records relating thereto to the extent it does not unreasonably interfere with the operation or maintenance of the Aircraft or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the date on which such payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto (provided that any failure of Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless notice is given by the Owner Participant to Lessee and the Indenture Trustee that such failure shall constitute an Event of Default); or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the -95- 97 Aircraft outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Aircraft; or (c) Any representation or warranty made by Lessee in the Operative Documents (other than the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement and the Tax Indemnification Agreement) or in any certificate furnished by Lessee in connection therewith is incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or any other Operative Document (other than the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement, and the Tax Indemnification Agreement), and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c), or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking -96- 98 reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of sixty (60) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within sixty (60) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of sixty (60) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or -97- 99 (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act; or (j) if the existence, validity, enforceability or priority of the rights or interests of Lessor under this Lease, or the rights or ownership of Lessor of the Aircraft under this Lease in respect of the Aircraft or the rights or interests of Note Holders under the Indenture are challenged by Lessee or any Person claiming by, through or on behalf of Lessee unless Lessee demonstrates that such a claim was not rightfully made by, through or on behalf of Lessee. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to all or any part of the Airframe and any or all of the Engines as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's expense, immediately return the Aircraft to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Aircraft) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Aircraft or any Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if such Aircraft were being returned at the end of the Term hereof with respect to such Aircraft. In addition, Lessor, at its -98- 100 option and to the extent permitted by applicable Law, may enter upon the premises where all or any part of the Aircraft is located to take immediate possession of and, at Lessor's option, remove the same (and/or any engine which is not an Engine but which is installed on the Airframe, subject to the rights of the owner, lessor or secured party thereof) by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry or taking of possession whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. (b) Sell or cause to be sold, the Aircraft or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Aircraft, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Aircraft to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Aircraft as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or Renewal Rent Payment Date, an amount equal to the Basic Rent -99- 101 or the Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Aircraft for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent for such Aircraft due to and including the date of sale, plus the amount by which the Stipulated Loss Value of such Aircraft, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the Aircraft under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Aircraft, which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for such Aircraft would have expired but for Lessee's default, discounted periodically (equal to installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (f) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Aircraft shall immediately cease, however, Lessee shall be and remain -100- 102 liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. (g) Proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Aircraft in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass-Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or responsible, in -101- 103 any manner, for any damage or injury to any of Lessee's property in repossessing and holding the Aircraft, the Airframe, an Engine or Part, except for direct damages caused by Lessor's gross negligence or willful misconduct, and (iv) shall have the right to maintain possession of and dispose of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Aircraft, the Airframe, an Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part and selling or releasing the Aircraft, the airframe, an Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Aircraft, the Airframe, an Engine or Part pursuant to this Section , Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. -102- 104 No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d) or (e) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Aircraft leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Aircraft, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. Section 19. Alienation. (a) Lessor Assignments. In addition, and subject, to the transactions contemplated by Section 19(b), Lessor shall not assign or transfer any interest of Lessor in this Lease and/or the Aircraft and/or the proceeds hereof to any Person except as provided herein, in the Trust Agreement, in the Indenture and in the Refunding Agreement. Any such assignment shall be subject to the condition that the transferee shall agree not to disturb the quiet enjoyment by Lessee of the Aircraft as and to the extent so agreed by Lessor in Section 21(f). (b) Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The -103- 105 Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and perfected security interest in all of Lessor's right, title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee hereby consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall -104- 106 constitute payment or performance of such obligation by Lessee. Section 20. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Aircraft for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, an amount equal to the greater of 120% of the "fair market sales value" of the Aircraft as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to Lessor, semi-annually in advance as Renewal Rent on each Renewal Rent Payment Date, the amount for such -105- 107 Renewal Term as determined in accordance with clause (i) of this Section 20. Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft or any Engine or Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Aircraft for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective -106- 108 addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). Until such time as the Lien of the Indenture is discharged, all notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee at such address as Indenture Trustee may designate from time to time. All notices hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft hereunder, and all -107- 109 rents, revenues, profits and income therefrom, in accordance with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it and without interference from any Person making a Claim concerning payment for or the ownership of Buyer Furnished Equipment with respect to the Aircraft, provided, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the -108- 110 subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications thereof, or waivers or consents thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the other Operative Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft similarly situated to Lessor. (l) U.S. Registration Number. At Lessee's request, Lessor shall use its best efforts to have the Aircraft registered under the United States Registration Number designated by Lessee. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Lessee hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or of any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United -109- 111 States District Court for the Southern District of New York. Lessee represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, Lessee hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Lessee hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee as from time to time may be designated by Lessee in writing to Lessor or Lessee, Owner Participant and Indenture Trustee. Lessee hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and -110- 112 agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all purposes hereof without the necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease as amended and restated by this Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] (and as otherwise extended, amended, modified, renewed or supplemented) shall be governed by Article 2-A of the Uniform Commercial Code of New York. -111- 113 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by their duly authorized officers as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:__________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:___________________________ Title: -112- 114 TABLE OF CONTENTS
Page ---- Section 1. Definitions........................................... 1 Section 2. Agreement to Lease.................................... 21 Section 3. Delivery and Acceptance; Term; Rental Period..................................... 21 (a) Time of Delivery...................................... 21 (b) [Intentionally Left Blank.]........................... 21 (c) Acceptance of Aircraft................................ 21 (d) Term of Lease......................................... 22 (e) Rental Period......................................... 22 Section 4. Rent; Minimum Payments................................ 22 (a) Rent.................................................. 22 (b) Minimum Payments...................................... 22 (c) Date, Place and Method of Payment..................... 23 (d) Prohibition Against Setoff, Counterclaim, Etc......... 23 Section 5. Representations, Warranties and Covenants.................................. 25 (a) Warranties and Disclaimer of Warranties............... 25 (b) Representations and Warranties of Lessor.............. 27 (c) No Amendments to Financing Documents.................. 27 (d) Suppliers' Warranties................................. 27 Section 6. Possession and Use.................................... 28 (a) Possession............................................ 28 (b) Reciprocal Recognition of Rights...................... 34 (c) Lawful Insured Operations............................. 35 (d) Maintenance........................................... 36 (e) Registration and Insignia............................. 37 Section 7. Inspection............................................ 38 Section 8. Additional Covenants of Lessee........................ 39 (a) Financial Information................................. 39 (b) Maintenance of Corporate Existence.................... 41 (c) Maintenance of Status................................. 42 (d) Payment of Taxes...................................... 42 (e) Consolidation, Merger, Etc............................ 42 (f) Information........................................... 43
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Page ---- (g) Place of Business..................................... 44 (h) Certain Limitations on Use............................ 44 (i) Section 1110.......................................... 44 (j) Permits and Licenses.................................. 45 (k) Security Opinion; Annual Certificate.................. 45 (l) Letter of Credit ..................................... 46 (m) ERISA................................................. 48 Section 9. Replacement of Parts; Alterations, Modifications and Additions................ 49 (a) Replacement of Parts.................................. 49 (b) Alterations, Modifications and Additions.............. 50 (c) Pooling............................................... 52 Section 10. General Tax Indemnification........................... 53 (a) Indemnity............................................. 53 (b) Exclusions............................................ 56 (c) Covered Income Tax.................................... 58 (d) Reports and Returns................................... 58 (e) After-Tax Basis....................................... 59 (f) Tax Benefit........................................... 59 (g) Payment............................................... 60 (h) Contest............................................... 60 (i) Refund................................................ 62 (j) Diligence............................................. 62 (k) Affiliated Group...................................... 63 Section 11. Loss, Damage and Requisition.......................... 63 (a) Event of Loss with Respect to the Airframe............ 63 (b) Event of Loss with Respect to an Engine............... 65 (c) Conveyance of Replacement Airframe.................... 67 (d) Application of Proceeds and Payments.................. 69 (e) Requisition for Use by Government with Respect to the Aircraft............................. 70 (f) Application in Default................................ 71 Section 12. Insurance............................................. 71 (a) Public Liability and Property Damage Insurance. ......................................... 71 (b) Insurance Against Loss or Damage...................... 73 (c) Application of Insurance Proceeds for an Event of Loss.................................... 76 (d) Application of Insurance Proceeds for Other than an Event of Loss......................... 77 (e) Application in Default................................ 77 (f) Certificates.......................................... 78
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Page ---- (g) Reinsurance........................................... 78 (h) Storage............................................... 79 (i) Amounts Held.......................................... 79 (j) After the Term........................................ 79 (k) Governmental Indemnity................................ 80 Section 13. General Indemnity..................................... 80 Section 14. Liens................................................. 85 Section 15. Protection of Title and Further Assurances................................. 87 Section 16. Return of Aircraft and Records........................ 88 (a) Return................................................ 88 (b) Status Upon Return.................................... 89 (c) Engines............................................... 90 (d) Records and Documents................................. 90 (e) Condition of Aircraft................................. 92 (f) Final Inspection...................................... 92 (g) Aircraft Records and Documents........................ 93 (h) Corrections and Subsequent Corrections................ 93 (i) Functional Flight Check............................... 94 (j) Export Certificate of Airworthiness................... 94 (k) Service Bulletin and Modification Kits................ 94 (l) Storage Upon Return................................... 95 (m) Resale/Release Cooperation............................ 95 Section 17. Events of Default..................................... 95 Section 18. Remedies.............................................. 98 Section 19. Alienation............................................103 (a) Lessor Assignments....................................103 (b) Security for Obligations..............................103 Section 20. Renewal Option........................................105 Section 21. Miscellaneous.........................................106 (a) Severability, Amendment, and Construction.............106 (b) Governing Law.........................................106 (c) Notices...............................................106 (d) Lessor's Right to Perform for Lessee..................107 (e) Counterparts..........................................107 (f) Quiet Enjoyment.......................................107 (g) Brokers...............................................108
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Page ---- (h) Investment of Funds...................................108 (i) Entire Agreement; Amendment...........................108 (j) Expenses..............................................109 (k) Federal Bankruptcy Code...............................109 (l) U.S. Registration Number..............................109 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial................................109 (n) Limitation on Recourse................................110 (o) Successor Trustee.....................................111 (p) Article 2-A of the UCC................................111
ANNEXES Annex I - Original Head Lease Description EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Aircraft Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 3 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Schedule of Domiciles of Permitted Sublessees Exhibit F-3 - Assignment of Permitted Sublease iv EX-4.25 26 RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-12] 1 EXHIBIT 4.25 THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-12] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, THE CHASE MANHATTAN BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-12] DATED AS OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE MANHATTAN BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF. - ------------------------------------------------------------------------------- AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1989 BN-12] Dated as of December 19, 1989 Amended and Restated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as amended Lessor and AMERICA WEST AIRLINES, INC. Lessee One Airbus A320-231 Aircraft Manufacturer's Serial No. 082 U.S. Registration No. N633AW - ------------------------------------------------------------------------------- 2 AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of December 19, 1989 and amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as defined in the Pass Through Trust Agreement); and the term 3 "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or elect or cause the direction or election of the management and policies of a Person whether by contract or otherwise. "Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement d'interet economique formed under the laws of the French Republic, and its successors and assigns. "Aircraft" shall mean the Airframe leased hereunder and described in Lease Supplement No. 1 (or any airframe from time to time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any Engine substituted therefor hereunder) with respect to such Airframe, whether or not any such initial or substituted Engines may from time to time no longer be installed on the Airframe or may be installed on any other airframe, (ii) Parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Aircraft Records and Documents and all other logs, manuals and records with respect to such Aircraft, and (v) all substitutions, replacements and renewals of any and all thereof. "Aircraft Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft (except Engines or engines from time to time installed thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such model aircraft (except Engines or engines from time to time installed thereon) which may from time to time be substituted for such aircraft (except Engines or engines from time to time installed thereon) pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same shall be incorporated or installed on or attached to the Airframe, or so long as title thereto shall remain vested in Lessor in -2- 4 accordance with the terms of Section 9 hereof after removal from the Airframe; provided, however, that at such time as an aircraft (except Engines or engines from time to time installed thereon) shall be deemed part of the property leased hereunder in substitution for the Airframe pursuant to the applicable provisions hereof and the replacement Airframe shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), the replaced Airframe shall cease to be the Airframe hereunder. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that such Aircraft, Airframe, Engine or Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Aircraft as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal -3- 5 pursuant to Section 18 in which case only Lessor shall select such appraiser (which appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Aircraft shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to Section 4(a)(i). -4- 6 "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 3. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Buyer Furnished Equipment" shall mean the equipment which was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar equipment furnished to Lessee. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. -5- 7 "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. "Consent and Guaranty" shall mean the Amended and Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated as of December 30, 1988, in the form attached to the Purchase Agreement. "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean December 28, 1989, being the date the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) each of the two IAE Model V2500 engines listed by manufacturer's serial number in Lease Supplement No. 1 and initially installed on the Airframe covered by such Lease Supplement, whether or not from time to time thereafter no longer installed on the Airframe or installed on any other aircraft or airframe, and (ii) any replacement engine which may from time to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for any Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. The term "Engines" -6- 8 means, as of any date of determination, both Engines then leased hereunder. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Aircraft, Airframe or either Engine: (a) loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days, but in no event later than the last day of the Term; (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any law, rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted -7- 9 Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing on the last day of the Term; or (h) as otherwise provided herein. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe which is a part of such Aircraft. An Event of Loss with respect to an Engine shall not, absent an Event of Loss with respect to the Airframe, be deemed an Event of Loss with respect to the Airframe. "Excluded Property" shall have the meaning set forth in Section 9(b) hereto. "Expiration Date" shall mean the date specified in Lease Supplement No. 2, on which date the Basic Term of this Lease shall expire. "FAA" shall mean the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head Lessee to Lessor. "Federal Aviation Act" shall mean the sections of Title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. -8- 10 "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass Through Trust Agreement and each supplement thereto and any certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Aircraft by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its operations. -9- 11 "Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee (in its individual capacity and as trustee under the Pass Through Trusts), the Subordination Agent and each Liquidity Provider, and their respective successors and permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), and any combination thereof and their respective officers, directors, agents, servants, employees, subsidiaries, Affiliates and shareholders. "Indenture" shall mean the Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of December 19, 1989, and amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture computed on the basis of a 360-day year and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. -10- 12 "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989 BN-12] No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989 BN-12] No. 2 dated as of December 31, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989 BN-12] No. 3, substantially in the form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Aircraft hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9- -11- 13 207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Aircraft, the Airframe, any Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of -12- 14 their Affiliates arising out of the transfer of all or any part of their respective interest in the Aircraft, the Airframe, either Engine, the Trust Estate, the Operative Documents or the Financing Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20 (except Liens resulting from a transfer not permitted by such Section ) of this Lease or pursuant to Section 10 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other maintenance program for the Aircraft which is approved by the aviation authority of the country of registry and complies with the requirements applicable to maintenance of the Aircraft contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Airframe, Engines, and components of the Aircraft, including, but not limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, -13- 15 airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean, collectively, Manufacturer's Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be applicable in any given circumstance, together in each case with any subcontractor or supplier thereof. "Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French societe a responsabilite limitee, which as of the date hereof is owned by Airbus Industrie. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, any sublease, the Tax Indemnification Agreement, the Financing Documents, and any certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Aircraft Lease Agreement [GPA 1989 BN-12], with respect to the Aircraft, dated as of December 19, 1989, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification -14- 16 Agreement [GPA 1989 BN-12], dated as of December 19, 1989, and amended and restated as of the Restatement Date, between the Original Head Lessee and Owner Participant, as amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a Connecticut corporation. "Original Sublease" shall mean the Initial Sublease (as defined in the Original Head Lease) as in effect immediately prior to the Restatement Date. "Other Leases" shall mean the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, each as amended, supplemented or otherwise modified from time to time. "Other Letters of Credit" shall mean any and all letters of credit pursuant to Section 8(l) of the Other Leases. "Owner Participant" shall mean ___________________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. -15- 17 "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Partial Assignment" shall mean the A320 Partial Assignment, Assumption, Release and Amendment Agreement, dated as of December 30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified. "Participation Agreement" shall mean the Participation Agreement [GPA 1989 BN-12], dated as of December 19, 1989, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named therein, as of July 29, 1993, as the same may be amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (excluding complete Engines or engines), including Buyer Furnished Equipment, which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Airframe or any Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Airframe or Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). -16- 18 "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Amended and Restated Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as partially assigned to Parent pursuant to the Partial Assignment, to which Airbus Industrie, as guarantor, has consented, and as the same may from time to time be further amended, supplemented or otherwise modified to the extent permitted by the terms thereof. "Purchase Documents" shall mean the Purchase Agreement, the Partial Assignment and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Renewal Rent Payment Date shall be made on the next succeeding Business Day. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee -17- 19 shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Airframe" and "Replacement Engine" shall have the meanings specified in accordance with their description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. "Return Occasion" shall mean the event that occurs when possession of the Aircraft is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations -18- 20 described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20 (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Airframe or such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth, on Exhibit A hereto. "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of (a) an incipient Event of Loss and the operation of Section 11 hereof or (b) the need to correct any failure of the Aircraft to satisfy the requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to the -19- 21 Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this definition of "Supplemental Rent", as the case may be, not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Pro Rata Share" means as of any date of determination a fraction the numerator of which is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "equipment notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-12], dated as of December 19, 1989, and as amended and restated as of November 26, 1996, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Taxing Authority" shall have the meaning specified in Section 10(a). "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 2 and, if Lessee extends -20- 22 the Term in accordance with Section 20, the Renewal Term, in either case as extended or deemed extended as a result of the occurrence of an event described in clause (iii) to the definition of "Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989 as amended by Trust Supplement No. 1 and as further amended by Trust Supplement No. 2 between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include each Trust Supplement. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1 and Trust Supplement No. 2 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1989 BN-12] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1989 BN-12] No. 2 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Aircraft or the Airframe and Engine or engines installed thereon at that time to a third party pursuant to which such Aircraft or the Airframe and Engine or engines (i) shall be operated solely by regular employees of Lessee possessing all current certificates and licenses required under the Federal Aviation Act (it is understood that cabin attendants need not be regular employees of Lessee) and Lessee otherwise maintains -21- 23 operational control and possession thereof, and (ii) shall be maintained by Lessee in accordance with its normal maintenance practices and this Lease, and otherwise the insurance required hereunder shall be maintained and the Aircraft shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term. (a) Time of Delivery. The Aircraft was delivered to Lessee, and Lessee accepted delivery of the Aircraft, on December 28, 1989. (b) [Intentionally Left Blank] (c) Acceptance of Aircraft. The Aircraft leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. Section 4. Rent. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in arrears as set forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and -22- 24 (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable ten (10) Business Days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to the terms hereof shall survive the expiration or termination of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon, and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in -23- 25 immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in the City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except for all Excepted Payments. All Excepted Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft (subject to the provisions of Section 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any sublease or any absence of right, power or authority of Lessor, Original Head Lessee, -24- 26 Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, -25- 27 Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE -26- 28 AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has, the right to lease the Aircraft hereunder and (y) on the Delivery Date the Aircraft was free of Head Lessor's Liens and on the Restatement Date the Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of this Lease and the delivery of the Aircraft and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Aircraft continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty -27- 29 by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or airframe or propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect thereto under the Purchase Agreement (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Aircraft), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or either of the Engines or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as -28- 30 all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject any Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that no transfer of the registration of any Engine shall be effected in connection therewith; and provided, further, that (A) no such agreement or arrangement contemplates, results in or requires the transfer of title to any Engine, and (B) if Lessor's title to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and not an Event of Default and Lessee shall comply with Section 11(b) hereof in respect thereof; (2) deliver possession of the Aircraft, the Airframe or any Engine to the manufacturer thereof, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on such Aircraft, Airframe or Engine or any part thereof or for alterations or modifications in or additions to such Aircraft, Airframe or Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Aircraft or the Airframe to the United States of America or any instrumentality or agency thereof pursuant to a sublease; (4) (i) subject the Airframe to the Civil Reserve Air Fleet Program and transfer possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the -29- 31 United States Air Force to whom notices must be given; or (ii) subject the Airframe to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install an Engine on an airframe (other than the Airframe) owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or engines installed thereon; (6) install an Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that each Engine leased to Lessee hereby shall not become subject to the Lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of such Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the owner of such Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns -30- 32 will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install an Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine and Lessee shall comply with Section 11(b) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in such Engine under applicable Law until compliance by Lessee with such Section 11(b); (8) enter into a Wet Lease for the Aircraft or the Airframe and engines installed thereon in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee shall enter into any Wet Lease for a period of more than six months (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given at least ten (10) Business Days prior to entering into such Wet Lease); or (9) sublease the Aircraft or the Airframe to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section 6(a) hereof (other than the transfer of an Engine which is deemed to have been an Event of Loss) and any Wet Lease shall be expressly subject and subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of -31- 33 this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of the Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable; (6) The sublessee under any Permitted Sublease, in its consent thereto, shall confirm that from and after the occurrence and continuance of an Event of Default and, unless an Event of Default specified in Section 17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease being deemed or declared in default, Lessor (and, so long as the Lien of the Indenture shall not have been discharged, Indenture Trustee) shall be entitled to enforce directly and in its own name all representations, warranties, indemnities, covenants and agreements under the applicable Permitted Sublease; and (7) Each Permitted Sublease shall (A) provide that (I) the Aircraft or Airframe may not be operated or used other than as provided in this Lease and shall -32- 34 be maintained and operated as required hereunder, (II) Lessor may avoid or terminate such sublease following an Event of Default hereunder and (III) to the extent not accomplished by an assignment of the Permitted Sublease, upon the occurrence of an Event of Default hereunder, Lessee's rights under such Permitted Sublease shall automatically be deemed assigned to Lessor; and (B) be a "net lease" in accordance with industry practice and shall be comparable to, or more restrictive than, this Lease and under such Permitted Sublease (except a sublease to the United States Government or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor under such Permitted Sublease, must be entitled to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted Sublease shall contain provisions regarding such Section 1110 which are substantially the same as the related provisions of this Lease. In addition, from and after the occurrence and continuance of an Event of Default, all rent and other amounts payable by the Permitted Sublessee under such Permitted Sublease shall be paid directly to Indenture Trustee and, upon discharge of the Lien of the Indenture, to Lessor. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Aircraft or the Airframe to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to -33- 35 Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Aircraft in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Aircraft by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Aircraft, to the registry of the Aircraft in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably -34- 36 requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. Any Permitted Sublease shall expressly provide that the rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under the other Operative Documents or constitute a waiver of Lessor's rights or remedies hereunder or under the other Operative Documents, and such rights shall continue as if such Permitted Sublease had not occurred. Any Permitted Sublease shall expressly prohibit any further sub-sublease or assignment or any other similar transfer of the Aircraft, Airframe or any Engine or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease together with an assignment, as security for Lessee's obligations hereunder, of such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days following the effective date of such Permitted Sublease. (b) Reciprocal Recognition of Rights. In the event the lessor or secured party of any airframe leased to Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or other security agreement in accordance with Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement covering such airframe also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement, Lessor hereby agrees for the benefit of such lessor or secured party that Lessor will not acquire or claim, as -35- 37 against such lessor or secured party, any right, title or interest in any such engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease or conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. Lessor also hereby agrees for the benefit of the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as against such mortgagee, any right, title or interest in any engine subject to the lien of such mortgage as the result of such engine being installed on the Airframe at any time while such engine is subject to the lien of such mortgage. (c) Lawful Insured Operations. Lessee will not permit the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, any manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the Aircraft is registered with the FAA, or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Aircraft or impair the interest of Lessor therein or impair the validity or priority of the Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Aircraft during the Basic Term or the then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Aircraft, or suffer -36- 38 or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, any other applicable rules, regulations and requirements by any other applicable Governmental Entity, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by Lessee without discrimination and as if Lessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the -37- 39 Aircraft, as shall be the case with respect to similar aircraft and engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by the central civil aviation authority of the country of registry, and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such condition as is necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times under the Federal Aviation Act and any other applicable law, or the applicable laws of any other jurisdiction in which the Aircraft may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the Aircraft at all times, at its expense, to be duly registered during the Restricted Use Period and, subject to Section 11 of the Refunding Agreement, thereafter under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as (i) while the Aircraft is registered under the Federal Aviation Act, each of the Lessor or its successors or assigns is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not register the Aircraft or permit the Aircraft to be registered under any Laws other than the Federal Aviation Act at any time except as provided in Section 11 of the Refunding Agreement and shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Aircraft and this Lease at all times. At any time after the Restricted Use Period, -38- 40 Lessor, upon compliance with all of the terms of Section 11 of the Refunding Agreement, shall, at the request and sole expense of Lessee, cooperate with Lessee to take all actions reasonably required to change the registration of the Aircraft to another country. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") in the cockpit of the Aircraft and on each Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a location reasonably adjacent to and not less prominent than the airworthiness certificate for the Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Aircraft or either Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Airframe and Engines to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause any sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee on reasonable prior notice at reasonable times to visit, inspect and survey the Aircraft (including, without limitation, a visual "walk around" inspection which may include going on board the Aircraft, and inspecting the Aircraft during maintenance checks when panels and bays are open and subject to view), its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as no Default or Event of Default has occurred hereunder -39- 41 inspections shall be endeavored to be performed during regularly scheduled maintenance checks of the Aircraft. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Airframe or any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its -40- 42 consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Aircraft, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vi) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Aircraft, either Engine or any Part with a repair or replacement cost (including labor charges) in excess of $1,000,000; -41- 43 (vii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (viii) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Aircraft, the Airframe or either Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets (in one or a series of transactions) to any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock -42- 44 (the "Successor Entity"): (A) shall be a corporation organized and existing under the Laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Aircraft as may be reasonably requested by Lessor or Owner Participant or -43- 45 the Internal Revenue Service in order to permit Lessor to file its Federal and state income tax returns (or to permit the filing of the Federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Aircraft, the Airframe or the Engines. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Aircraft, Airframe or Engines only in commercial passenger operations and related cargo operations. Unless Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the Aircraft, Airframe or Engines to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Aircraft, Airframe or Engines for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft to be operated in any member state of the European Union or other European country, Lessee shall deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to -44- 46 Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all aircraft (including, without limitation,the Aircraft) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this amended and restated Lease unless it had available to it the benefits of a lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Aircraft hereunder. The acknowledgement, covenant and agreement contained in this Section 8(i) shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by the Lessor, the Owner Participant and, if the Lien of the Indenture has not been discharged, the Indenture Trustee. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Aircraft, the Airframe, any Engine or Part or the execution, delivery or performance of this Lease or the enforcement thereof against Lessee. (k) Security Opinion; Annual Certificate. (i) During such times that the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered -45- 47 on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, rerecording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Lessor's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Aircraft is registered under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the -46- 48 then-current applicable Law, reciting the details of such actions. (l) Letter of Credit. As security for the obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default has occurred, which amount may be applied, retained or utilized as provided in the penultimate paragraph of this Section 8(l). (ii) be maintained in full force and effect at all times until ninety-one (91) days after the Expiration Date with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that a Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited, will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long term unsecured debt rating at least equal to its rating on the date hereof; (iii) be expressly designated as transferrable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term or the Lessor is holding proceeds of the Letter of Credit that were retained and not applied as provided herein, then Lessor shall return the Letter of Credit to Lessee or terminate it, and/or return any retained and unapplied proceeds, ninety-one (91) days following the date of such expiration or other termination of this Lease so long as no Default or Event of Default has occurred or is continuing hereunder or under any Other Lease, upon payment in full of all amounts then due and owing to Owner Trustee and Owner Participant under the Operative Documents. -47- 49 If an Event of Default has occurred or is continuing under this Lease or an Event of Default has occurred or is continuing under any Other Lease (as therein defined), in addition to any other rights and remedies Lessor may have hereunder, under any Other Lease, any sublease and any and all other remedies available at Law (including, without limitation, the Uniform Commercial Code as adopted in New York) or equity and upon exercising its rights under the Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to (i) hold any amounts drawn under the Letter of Credit or Other Letters of Credit as security for Lessee's obligations under this Lease or the Other Leases, (ii) retain any amounts drawn under the Letter of Credit or Other Letters of Credit for its own account and apply (including, without limitation, by way of set off against) such drawn amounts as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease and the Other Leases) to remedy any breach by Lessee of this Lease or any other Operative Documents or Other Leases or (iii) recompense Lessor, Owner Participant or any of their respective Affiliates for any loss, damage, cost or expense or other Claim due or owing hereunder or under the Other Leases; provided, however, that in the case of any drawing in respect of any claim for the payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts which would (absent such Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders); provided further, however, that neither the amount so applied at any one time nor the aggregate amount so applied at different times shall reduce the amount of any installment or payment of Rent (whether upon the termination of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in full the amounts required to be paid on account of the principal of and any interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or credit with respect to any amounts so applied. Any amount retained shall be considered the property of Lessor and Lessor may commingle such amount with its general funds and Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum extent permitted by applicable Law, any interest therein. Lessee shall not be entitled to any interest or other earnings on such retained amount and such amount shall not be refundable. -48- 50 On application of all or any portion of the amounts drawn under the Letter of Credit or any Other Letters of Credit in accordance with this Section 8(l), or the Other Leases, Lessee shall on demand reinstate the amount of the Letter of Credit or Other Letters of Credit, as the case may be, to its or their full Face Amount or provide to Lessor one or more additional Letters of Credit meeting the requirements of this Section 8(l), so that the Letter of Credit and each of the Other Letters of Credit at all times equals the original Face Amount provided for herein. During such times as Lessor shall elect to hold all or part of the proceeds of the Letter of Credit or Other Letters of Credit as security for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee shall not be obligated to reinstate the amount of the Letter of Credit or Letters of Credit, as the case may be, in respect of the proceeds so held. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). All Parts which are at any time removed from the Aircraft shall remain the property of Lessor, subject to the -49- 51 Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Aircraft and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Aircraft as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine to the extent made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Airframe, Engines or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Airframe, either Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Airframe, Engines and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Aircraft as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been -50- 52 discharged) and this Lease, without the necessity for any further act of transfer, document or notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Aircraft on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Aircraft without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Aircraft would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Aircraft (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not -51- 53 to acquire or claim, as against Lessor, any right, title or interest in the Aircraft, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Aircraft in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Aircraft as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Aircraft. Notwithstanding any other provision hereof, and without limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted Sublessee) may install in the Aircraft audio visual, entertainment or telephonic equipment (including seats with such equipment installed therein) (any or all of which are hereafter referred to as "Excluded Property") in the ordinary course of business, and Lessor shall not claim or acquire title thereto and the rights of the owners thereof therein shall not constitute a default hereunder; provided that (i) any such Excluded Property shall be removed prior to the date of a Return Occasion without causing any damage to the Aircraft and without diminishing or impairing the value, utility, remaining useful life or condition which the Aircraft would have had at such time had such Excluded Property not been installed, (ii) any equipment or seats which such Excluded Property replaces shall be properly stored with the interests of Lessor and, if the Lien of the Indenture is in -52- 54 effect, the Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee or warehouse, and properly reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are required as a result of such removal and/or reinstallation. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Aircraft, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Airframe or either Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided the Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of and transferring title to Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to -53- 55 be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee provided that in any circumstance in which the Lessor is required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into -54- 56 account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or otherwise, with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, by any federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) the Aircraft, the Airframe, any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, reregistration, deregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or -55- 57 (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any modification or reissuance, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, Taxes imposed on, based on, or measured by, the gross or net income of such Indemnitee or Taxes in lieu thereof (including minimum taxes, withholding taxes and taxes on or measured by any item of tax preference) imposed by the federal government of the United States of America (other than taxes in the nature of sales or use taxes, license taxes, or property taxes), (ii) In the case of any Indemnitee, Taxes imposed on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any state, local or foreign government or taxing authority (other than Taxes in the nature of sales Taxes, use Taxes, license Taxes or property Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which arise out of or are caused by any gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee or any sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner -56- 58 Trustee and Owner Participant are related Indemnitees with respect to each other) of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (A) an Event of Default and the exercise by any Indemnitee of its remedies under this Lease or the Indenture, as the case may be or (B) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms hereof; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed on a transferee of such Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any Part or any interest in the Operative Documents to the extent the amount of any such Taxes exceeds the amount of such Taxes that would have been imposed had there not been any such transfer, unless such transfer results from action by or on behalf of such Indemnitee taken in connection with any Event of Default that has occurred and is continuing or upon the request of the Lessee, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this Section 10(b) or to a failure by Lessee to satisfy its obligations related to such return, (vii) With respect to an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, Taxes which arise out of or are caused by (i) any act or omission or material misrepresentation of any Indemnitee where such act or omission is not permitted by the Financing Documents or the Operative Documents, or (ii) a failure by an Indemnitee to fulfill its contest obligations, and, in the case of the Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a result of a breach of such -57- 59 Indemnitee's representations, warranties, or covenants contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any material respect, or from a failure by such Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Aircraft, (ix) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust, or (x) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) in the case of an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (other than taxes which are in the nature of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee (A) by any state or local Taxing Authority other than Taxes imposed by any such state or local jurisdiction in which the Indemnitee has its principal place of business or is subject to such Tax as a result of business transactions or other presence unrelated to the transactions contemplated by the Financing Documents or the Operative Documents, unless such Taxes are imposed by such jurisdiction solely as a result of (x) the operation of the Aircraft in such jurisdiction or (y) the transactions contemplated by the Operative Documents, to the extent such taxes are directly attributable to such operation of the Aircraft or to such transactions, and (B) by any foreign jurisdiction which are imposed as a result of Lessee's or -58- 60 sublessee's activities in such foreign jurisdiction in connection with the transactions contemplated by the Financing Documents or the Operative Documents, provided, however, a Covered Income Tax also includes the incremental amount of franchise taxes, taxes on doing business, capital stock taxes or taxes on, based on or measured by gross or net income of the original Owner Participant attributable to the Lease (excluding, however, any taxes that would be excluded under any provision other than clauses (i) and (ii) of subsection (b) of this Section 10) which are imposed by the "Home State" of a sublessee (the Home State of a sublessee being the jurisdiction in which such sublessee maintains its principal operations and maintenance center), or in the absence of a Permitted Sublessee, the jurisdiction where the Aircraft is stored, but only to the extent such incremental taxes result from activities of Lessee or Permitted Sublessee under the Lease in or with respect to the Home State or the jurisdiction where the Aircraft is stored, and taking into account in calculating such incremental taxes all state tax benefits and savings in the Home State resulting from activities of Lessee or Permitted Sublessee under the Lease, disregarding for such purpose any actual or constructive changes in ownership of the original Owner Participant, provided, however, that Owner Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's liability for indemnity payments attributable to taxes incurred in sublessee's Home State with respect to each Permitted Sublessee; (ii) in the case of the Indenture Trustee or the Trust Indenture Estate, any Tax based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (including minimum taxes, withholding taxes, and taxes on or measured by any item of tax preference) imposed on such Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction other than merely by reason of such Indemnitee's participation in -59- 61 the transactions contemplated by the Operative Documents; and (iii) in the case of the Indenture Trustee, or the Trust Indenture Estate, a tax imposed by any Taxing Authority other than the Federal government of the United States of America based on, or measured by gross income or receipts (including minimum taxes, withholding taxes, and taxes on or measured by any item of tax preference), to the extent such Tax is attributable to the operation of registration of the Aircraft in such jurisdiction or to the transactions contemplated by the Operative Documents or is the result of the activities of Lessee, sublessee, or any Affiliate of either thereof in such jurisdiction, including residence. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to the Owner Participant or Owner Trustee or will notify the Owner Participant or Owner Trustee of such requirement and make such report or return in such manner as shall be reasonably satisfactory to Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient -60- 62 of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of Taxes imposed on the Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest federal corporate income tax rate applicable to Owner Participant in the year of payment and the highest corporate income tax rate in the jurisdiction in which Owner Participant files a consolidated state income tax return (currently Virginia). (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (ii) the reduction calculated on the same basis as the gross up in Section 10(e) hereof in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (i) above would exceed (A) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (B) the portion of all prior payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an -61- 63 indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. In the event that an Indemnitee receives a written notice of a claim which, if sustained, would require the payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's sole expense, in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in whole or in part separately in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, the Lessee shall not be permitted to contest in the name of such Indemnitee if such contest involves Taxes imposed against such Indemnitee that are unrelated to the transactions contemplated by the Financing Documents or the Operative Documents or Taxes based on or measured by the gross or net income of the Indemnitee, and provided, that if the Indemnitee determines in good faith -62- 64 that there is a material possibility of a material adverse impact upon the Indemnitee with respect to such contest, such Indemnitee may retain or reassert control of any contest that Lessee would otherwise be permitted to contest; provided, further, that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) Lessee shall have (a) furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352) exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), provided however, that in the event the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of tax counsel, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which the Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of statutory changes-in-law, it is as likely as not that the position will prevail, and (b) agreed to pay Indemnitee for all reasonable costs and expenses which Indemnitee may incur in contesting such claim (including without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayment of estimated taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interests), (ii) a threshold amount of $50,000 for any individual claim is at issue, (iii) there is no substantial risk or danger of the sale, loss or forfeiture of the Aircraft, (iv) Lessee shall have admitted its liability to indemnify Owner Participant for such claim or set forth in writing why it is not so liable, -63- 65 (v) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, the Lessee shall have advanced to such Indemnitee sufficient funds (on an interest free basis) to make such payments, (vi) no claim shall be appealed to the U.S. Supreme Court, (vii) no appeal of a trial court decision shall be undertaken unless Lessee at its sole cost and expense shall have furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that Indemnitee is more likely than not to prevail in such appeal, and (viii) no Event of Default has occurred and is continuing. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released -64- 66 from its responsibility to contest such claim or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include any member of such affiliated group. (l) Verification. At Lessee's request, the amount of any indemnity payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified by an independent public accounting firm selected by such Indemnitee and reasonably satisfactory to Lessee. In order to enable such accountants to verify the indemnity amount, such Indemnitee shall provide to the accountants (for their own confidential use) information reasonably necessary for such verification to which Lessor has access; provided, however, such information shall not be disclosed to Lessee or any person other than such accountants. The fee of such firm shall be payable by Lessee unless such verification shall result in an adjustment in Lessee's favor exceeding 10% of the amount of the indemnity payment. (m) Survival. All of the obligations and rights of Lessee and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the Engines or any Part thereof shall survive the assignment, or expiration or other termination, of the Lease with respect to the Aircraft for a period of six (6) years from the occurrence of such assignment, or expiration or termination, except that such obligations shall survive the expiration of such six (6) year period with respect to any claim asserted prior to the expiration of such six (6) year period but in either case only to the extent such obligation or claim relates to events which occurred or conditions which existed during the Term. Such obligations are expressly undertaken by Lessee for the benefit of, and shall be enforceable by, Lessor. The provisions of this Section 10(m) are subject to the exclusions of Section 10(b)(viii). -65- 67 Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Airframe. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Airframe or the Airframe and any Engines then installed thereon, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Airframe and such Engines then installed thereon, title to a replacement Airframe (together with the same number of replacement Engines as the Engines), such replacement Airframe and Engines (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe and replacement Engines may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and to be in at least as good operating condition as, the Airframe and the Engines, if any, so replaced (assuming the Airframe and the Engines were maintained in accordance with the requirements of this Agreement, whether or not they are in fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988 and, in the case of Engines, in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to -66- 68 comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and the Engines suffering the Event of Loss as well as all of Lessor's right, title and interest in and to any Engine constituting part of the Aircraft and replaced as provided above but not installed thereon at the time of the Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed part of the property leased hereunder and shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in replacement of the Airframe or Engines under this Section 11(a)(i) shall result in any reduction of Rent. (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss (or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last day of the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, in effect on the last day of the Term, for each day from and including the last day of the Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are -67- 69 paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and Engines suffering the Event of Loss, as well as all of Lessor's right, title and interest, if any, in and to any Engine constituting part of the Aircraft but not installed thereon at the time of the Event of Loss. (b) Event of Loss with Respect to an Engine. Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine and is suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, free of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence -68- 70 of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens), and is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a) (5) (i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), -69- 71 Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein and shall be deemed part of the same Aircraft as was the Engine replaced thereof. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Conveyance of Replacement Airframe. Prior to or at the time of any conveyance of a replacement Airframe pursuant to Section 11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the following documents which shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect on said date: (i) a full warranty bill of sale, in form and substance satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be approved by the FAA on said date), executed by the owner thereof, in favor of Lessor and, cause supplements, reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), to this Lease, the Indenture (if then in effect) and the Trust Agreement (if then in effect), with respect to such replacement Airframe and to be duly filed for recordation pursuant to the Federal Aviation Act or other applicable Governmental Entity; (ii) the certificate specified in Section 12(f) hereof demonstrating compliance with the insurance requirements of Section 12 with respect to the replacement Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such other evidence of title as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request) to the effect that, upon such conveyance, Lessor will acquire good title to such replacement Airframe free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe may be subject to Permitted Liens), that such replacement Airframe will be leased hereunder to the same extent as the Airframe replaced thereby and will be subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant -70- 72 Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and Replacement Engine and the Lien of the Indenture on such Replacement Airframe and Replacement Engine; and that Lessor, and Indenture Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement airframe and engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement; (iv) a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (v) such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(c), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(c), in each case in form and substance satisfactory to each such party, including evidence that the Aircraft of which the replacement Airframe is a part has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of this Lease and application for registration of such replacement Airframe in the name of Lessor has been duly made with the FAA or other applicable Governmental Entity and Lessee has temporary or permanent authority to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code financing statements covering the replacement Airframe as may be reasonably requested by Lessor or Indenture Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal prepared in accordance with the Appraisal Procedure which confirms that the replacement Airframe and any replacement Engine has a value, utility and remaining useful life at least equal to that of the Airframe and Engines which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of this Lease whether or not they are -71- 73 in fact so maintained; and (ix) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe is free and clear of Lessor's Liens), all of Lessor's right, title and interest in and to the Aircraft which suffered the Event of Loss. No Event of Loss with respect to the Aircraft under the circumstances contemplated by the terms of this Section 11(c) shall result in any reduction in Rent. For all purposes of this Lease, each such replacement Aircraft (together with any Engines constituting part of the Aircraft being replaced as to which an Event of Loss has not occurred) shall be deemed part of the property leased hereunder and shall be deemed the "Aircraft" as defined herein. (d) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer (including a Governmental Entity providing an indemnity in lieu thereof) with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other than insurance or such indemnity proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and other payments, if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or -72- 74 an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (e) Requisition for Use by Government with Respect to the Aircraft. Subject to Section 11(f) below, in the event of the requisition for use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other than a requisition constituting an Event of Loss), Lessee shall promptly notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) thereof and all of Lessee's obligations under this Lease with respect to such Airframe or Engine shall continue to the same extent as if such requisition had not occurred. All payments received by Lessor or Lessee from the Governmental Entity for the use of such Airframe or Engine during the Term shall be paid over to, or retained by, Lessee if no Default or Event of Default shall have occurred and be continuing; and all other payments received by Lessor or Lessee from the Governmental Entity shall be paid over to, or retained by, Lessor. If the Airframe and such Engines or engines are not returned by the end of the Term, an Event of Loss shall be deemed to have occurred on the last day of the Term and, on the last day of the Term, Lessee shall either pay to Lessor the amount provided herein for an Event of Loss to the Airframe and such Engines or engines on such date or provide a replacement Aircraft and Engine on such date in the condition provided for in Section 16 and Exhibit E. In the event of the requisition for use by the Governmental Entity of any Engine without the requisition for use of the Airframe, Lessee will replace such Engine hereunder by complying with the terms of Section 11(b) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (f) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default -73- 75 shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability products, completed operation liability covering maintenance of aircraft, but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Aircraft, in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the -74- 76 insurance shall not be invalidated as to an insured or additional insured by any act or omission of Lessee or any other insured or additional insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured or additional insured of any breach or violation by Lessee or any other insured or additional insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage), after notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft is located or operated, and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, or the other Indemnitees, or their respective permitted assigns, with respect to the Aircraft. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, -75- 77 Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the consent of Lessee) covering the Aircraft, and "all-risk" coverage including transit insurance with respect to Engines and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull insurance reasonably acceptable to Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly-sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged; provided that Indenture Trustee shall not be obligated to request such insurance and shall not be liable for any failure to request such insurance. Anything herein to the contrary notwithstanding, at all times while the Aircraft is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Aircraft. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable -76- 78 to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Aircraft, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it -77- 79 may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Aircraft, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee, as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. -78- 80 (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and any other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with -79- 81 respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Aircraft and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the -80- 82 insurance then maintained on the Aircraft complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris if the relevant primary insurer shall have obtained reinsurance and such reinsurance (i) is on the same terms as the original insurance and includes the provisions required by this Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contains a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] dated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss -81- 83 due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for passenger aircraft of similar size as the Aircraft in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. -82- 84 Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims (whether or not based on strict liability), damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, costs and expenses set forth in Section 21(j) hereof and reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee, from (and including) the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Aircraft to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations thereunder or to file the documentation necessary to continue FAA registration of the Aircraft), delivery, nondelivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest -83- 85 therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such defect shall be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the -84- 86 Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder or thereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part -85- 87 thereof, either in the air or on the ground, or which may be caused by any defect in such Aircraft, Airframe, Engine, engine or Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of the location of such Aircraft at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents (except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the -86- 88 period prior to such disposition), (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee has the right to control the defense thereof is materially -87- 89 prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section. Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Aircraft or of the residual value of the Aircraft. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease or any of the other Operative Documents and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) -88- 90 inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except -89- 91 it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor, cause any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease, and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture -90- 92 Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Aircraft or Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Section 16. Return of Aircraft and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Aircraft to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree, fully equipped with all required Engines, or other engines owned by Lessee (which shall thereupon become Engines as hereinafter provided) meeting the conditions specified in this Section and Exhibit E, duly installed thereon by delivering the same to the Lessor at such location. Lessee shall comply with Section 11(b) and this Section 16 with respect to any engines installed on the Aircraft returned to Lessor hereunder and meeting the conditions described herein which were not originally installed on the Aircraft. (b) Status Upon Return. Upon any Return Occasion hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act and with a current and valid Airworthiness Certificate -91- 93 installed on the Aircraft, unless such certificate shall have been suspended or revoked as a result of the suspension or revocation of the registration of the Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft to be registered in the name of Lessor under the Federal Aviation Act (whether by means of a voting trust agreement or otherwise) in which case the Aircraft shall nevertheless meet all conditions for such certification and for the issuance of such certificate; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Aircraft to be operated under, and in full compliance with, such Airworthiness Certificate and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense with respect to effecting such registration, duly registered in the name of the Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vii) in good and airworthy operating condition, and in the same condition (including, without limitation, in a passenger configuration suitable for passenger revenue service) as when delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (viii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Engines. In the event any engine not owned by Lessor shall be installed on the Aircraft on any Return Occasion, without limiting Lessee's obligations under the -92- 94 Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engines or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engines, assuming the Engines were in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens. (d) Records and Documents. Upon the return of the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Aircraft, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Aircraft and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Aircraft under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Aircraft under the Maintenance Program, in each case as Lessor may reasonably request, and all documentation with respect to the Aircraft set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Aircraft on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of -93- 95 Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Aircraft, Airframe, Engines, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an aircraft which has been operating in regulated commercial air service, shall be delivered to Lessor with the Aircraft. Any documents or records required to be delivered hereunder shall be in English. (e) Condition of Aircraft. Upon any Return Occasion, Lessee shall return such Aircraft to Lessor in such condition that the Aircraft shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Aircraft available to Lessor at the location where the "block 'C' Check" (or equivalent level designated check or checks) required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding -94- 96 compensation to representatives of Lessor), in order to verify that the condition of such Aircraft complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such "block 'C' Check" (or equivalent level check or checks) and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such "block 'C' Check" is being performed and shall have such duration as to permit the opening of any areas of the Aircraft which are necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Aircraft and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to the Aircraft undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations hereunder continued, on a daily basis until the Final Inspection shall have been concluded and Lessee shall pay Rent during any such extension in an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value during such extension shall equal the Stipulated Loss Value on the last day of the Basic Term or Renewal Term, as the case may be); provided, however, that Lessee shall not be required to pay Rent with respect to the Aircraft during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Aircraft Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where -95- 97 the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Aircraft. (h) Corrections and Subsequent Corrections. To the extent that the Aircraft or any Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as such Aircraft is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of such Aircraft and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of such Aircraft, at commercial rates then charged by the Person selected by Lessor to perform such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. Nothing set forth in this paragraph shall constitute a limitation on Lessor's or Owner Participant's ability to recover from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the return of the Aircraft at the time, in the place and in the condition as specified in this Section 16 and Exhibit E hereto. (i) Functional Flight Check. Immediately prior to the expiration of the Term, Lessor will be permitted to conduct a non-commercial functional flight check flight of no more than two (2) hours duration in accordance with the Manufacturer's functional flight check procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft and proper functioning of all systems and components. A qualified pilot and up to five (5) other representatives selected by Lessor may take part in such flight to verify compliance of the Aircraft with the requirements of this Lease, provided, that Lessor shall be responsible for the charges of such qualified pilot and representatives. Lessee may combine the functional flight check provided in this Section 16(i) with the delivery flight specified in Section 16(a) and such functional flight check shall include the landing. Any discrepancy or -96- 98 malfunction detected during any functional flight check (including a functional flight check combined with a delivery flight) shall be corrected, at Lessee's expense, and prior to the expiration of the Term. To the extent that any actions to correct any such discrepancy or malfunction extend beyond the Term, the provisions of the first sentence of Section 16(h) shall apply. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee. (j) Export Certificate of Airworthiness. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably request to assist Lessor in obtaining any required documents in relation to the export of the Aircraft from the United States (including, without limitation, a valid and subsisting export certificate of airworthiness with respect to the Aircraft and export license) and in relation to the deregistration of the Aircraft. (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Aircraft which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Aircraft for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Aircraft after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Aircraft and the records relating thereto to the extent it does not -97- 99 unreasonably interfere with the operation or maintenance of the Aircraft or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the date on which such payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto; provided that any failure of Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless Lessor or Owner Participant delivers notice to Lessee; or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Aircraft outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Aircraft; or (c) Any representation or warranty made by Lessee herein or in the Refunding Agreement or in any certificate furnished by Lessee in connection herewith or therewith is or was incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or the Refunding Agreement, and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, -98- 100 that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c) or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other -99- 101 insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within ninety (90) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of ninety (90) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to all or any part of the Airframe and any or all of the Engines as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's cost and expense, immediately return, and the Lessee hereby agrees that it -100- 102 shall return promptly all or such part of, the Aircraft to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Aircraft) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Aircraft or any Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if such Aircraft were being returned at the end of the Term hereof with respect to such Aircraft. In addition, Lessor or Lessor's agent, at its option and to the extent permitted by applicable Law, may but shall not be obligated to enter upon the premises where all or any part of the Aircraft, Airframe and/or Engines are located to take immediate possession of and, at Lessor's option, remove the same (and/or any engine which is not an Engine but which is installed on the Airframe, subject to the rights of the owner, lessor or secured party thereof) by summary proceedings or otherwise, all without liability accruing to Lessor or Lessor's agent for or by reason of such entry or taking of possession or removal whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. (b) With or without taking possession thereof, sell or cause to be sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty -101- 103 (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Aircraft to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Aircraft for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, Airframe or Engine or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent due to and including the date of sale, plus the amount by which the Stipulated Loss Value of such Aircraft, Airframe or Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In lieu of exercising its rights under paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in advance for the period on and after the Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such -102- 104 Aircraft due and unpaid for any period prior to and including, and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss Value for the Aircraft computed as of such Stipulated Loss Value Date; and upon such payment of liquidated damages and the payment of all other Rent then due hereunder and the discharge of the Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without recourse or warranty (except as to the absence of Lessor's Liens and the Lien of the Indenture), all right, title and interest of Lessor in and to the Aircraft to Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and deliver such documents evidencing such transfer and take such further action as Lessee shall reasonably request. (f) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the Aircraft, Airframe or Engine under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, Airframe or Engine, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Aircraft which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for such Aircraft, Airframe or Engine would have expired but for Lessee's default, discounted periodically (equal to installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (g) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. -103- 105 (h) Lessor may exercise any other right or remedy which may be available to it under applicable laws, or may proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above, until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Aircraft, Airframe or Engine in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's -104- 106 property in repossessing and holding the Aircraft, the Airframe, an Engine or Part except for direct damages caused by Lessor's gross negligence or willful misconduct and (iv) shall have the right to maintain possession of and dispose of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Aircraft, the Airframe, an Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Aircraft, the Airframe, an Engine or Part pursuant to this Section , Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. -105- 107 No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d), (e) or (f) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Aircraft leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Aircraft, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. The provisions of this Section 18 shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. Section 19. Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and perfected security interest in all of Lessor's right, title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee hereby -106- 108 consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) (other than Expected Rights) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. Section 20. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): -107- 109 (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Aircraft for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, in no event less than the greater of 120% of the "fair market sales value" of the Aircraft as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. -108- 110 Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, each of Lessor and Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft or any Engine or Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Aircraft for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices and instructions between Lessor and Lessee required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). All -109- 111 notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee (until such time as the Lien of the Indenture is discharged) and to Owner Participant, at such address as Owner Participant and Indenture Trustee, respectively, may designate from time to time. All notices and instructions hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft hereunder, and all rents, revenues, profits and income therefrom, in accordance -110- 112 with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it, provided that Lessor and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, Note Holder or any other Person lawfully claiming by or through them, and provided further, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the -111- 113 subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications hereof or thereof, or waivers or consents hereunder or thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the Financing Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft similarly situated to Lessor. (l) U.S. Registration Number. At Lessee's request, Lessor shall use its best efforts to have the Aircraft registered under the United States Registration Number designated by Lessee. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United -112- 114 States District Court for the Southern District of New York. Each of Lessee and Lessor represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee or Lessor hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, it hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Each of Lessee and Lessor hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee or Lessor as from time to time may be designated by Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns (as applicable). Final (after all appeals) judgment (the enforcement of which has not been stayed) against either Lessee or Lessor obtained in any suit originally brought in the court of the State of New York in New York County or in the United States District of New York shall be conclusive, and, to the extent permitted by applicable Law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings, against Lessee or Lessor, as the case may be, or any of their assets in the courts of any country or place where such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS -113- 115 BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all purposes hereof without the -114- 116 necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease, as amended and restated by this Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] (and as otherwise extended, amended, modified, renewed or supplemented), shall be governed by Article 2-A of the Uniform Commercial Code of New York. -115- 117 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by its duly authorized officer as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:__________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:___________________________ Title: -116- 118 TABLE OF CONTENTS
Page ---- Section 1. Definitions..................................................... 1 Section 2. Agreement to Lease.............................................. 21 Section 3. Delivery and Acceptance; Term................................... 22 (a) Time of Delivery................................................ 22 (b) ................................................................ 22 [Intentionally Left Blank] (c) Acceptance of Aircraft.......................................... 22 (d) Term of Lease................................................... 22 Section 4. Rent............................................................ 22 (a) Rent............................................................ 22 (b) Minimum Payments................................................ 23 (c) Date, Place and Method of Payment............................... 23 (d) Prohibition Against Setoff, Counterclaim, Etc............................................... 24 Section 5. Representations, Warranties and Covenants....................... 26 (a) Warranties and Disclaimer of Warranties......................... 26 (b) Representations and Warranties of Lessor.......................................................... 27 (c) No Amendments to Financing Documents............................ 27 (d) Suppliers' Warranties........................................... 27 Section 6. Possession and Use.............................................. 28 (a) Possession...................................................... 28 (b) Reciprocal Recognition of Rights................................ 35 (c) Lawful Insured Operations....................................... 36 (d) Maintenance..................................................... 37 (e) Registration and Insignia....................................... 38 Section 7. Inspection...................................................... 39 Section 8. Additional Covenants of Lessee.................................. 40 (a) Financial Information........................................... 40 (b) Maintenance of Corporate Existence.............................. 42 (c) Maintenance of Status........................................... 42 (d) Payment of Taxes................................................ 42 (e) Consolidation, Merger, Etc...................................... 42 (f) Information..................................................... 43 (g) Place of Business............................................... 44 (h) Certain Limitations on Use...................................... 44 (i) Section 1110.................................................... 45 (j) Permits and Licenses............................................ 45
i 119
Page ---- (k) Security Opinion; Annual Certificate........................... 45 (l) Letter of Credit............................................... 46 Section 9. Replacement of Parts; Alterations, Modifications and Additions...................................................... 49 (a) Replacement of Parts........................................... 49 (b) Alterations, Modifications and Additions....................... 50 (c) Pooling........................................................ 52 Section 10. General Tax Indemnity.......................................... 53 (a) Indemnity...................................................... 53 (b) Exclusions..................................................... 55 (c) Covered Income Tax............................................. 57 (d) Reports and Returns............................................ 59 (e) After-Tax Basis................................................ 59 (f) Tax Benefit.................................................... 60 (g) Payment........................................................ 60 (h) Contest........................................................ 61 (i) Refund......................................................... 63 (j) Diligence...................................................... 63 (k) Affiliated Group............................................... 63 (l) Verification................................................... 64 (m) Survival....................................................... 64 Section 11. Loss, Damage and Requisition................................... 64 (a) Event of Loss with Respect to the Airframe..................... 64 (b) Event of Loss with Respect to an Engine........................ 67 (c) Conveyance of Replacement Airframe............................. 68 (d) Application of Proceeds and Payments........................... 70 (e) Requisition for Use by Government with Respect to the Aircraft....................................................... 71 (f) Application in Default......................................... 72 Section 12. Insurance...................................................... 72 (a) Public Liability and Property Damage Insurance................. 72 (b) Insurance Against Loss or Damage............................... 74 (c) Application of Insurance Proceeds for an Event of Loss......... 77 (d) Application of Insurance Proceeds for Other than an Event of Loss........................................................... 77 (e) Application in Default......................................... 78 (f) Certificates................................................... 78 (g) Reinsurance.................................................... 79 (h) Storage........................................................ 80 (i) Amounts Held................................................... 80
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Page ---- (j) After the Term................................................. 80 (k) Governmental Indemnity......................................... 80 Section 13. General Indemnity.............................................. 81 Section 14. Liens.......................................................... 86 Section 15. Protection of Title and Further Assurances..................... 87 Section 16. Return of Aircraft and Records................................. 89 (a) Return......................................................... 89 (b) Status Upon Return............................................. 90 (c) Engines........................................................ 91 (d) Records and Documents.......................................... 91 (e) Condition of Aircraft.......................................... 92 (f) Final Inspection............................................... 93 (g) Aircraft Records and Documents................................. 94 (h) Corrections and Subsequent Corrections......................... 94 (i) Functional Flight Check........................................ 94 (j) Export Certificate of Airworthiness............................ 95 (k) Service Bulletin and Modification Kits......................... 95 (l) Storage Upon Return............................................ 95 (m) Resale/Release Cooperation..................................... 96 Section 17. Events of Default.............................................. 96 Section 18. Remedies....................................................... 98 Section 19. Security for Obligations....................................... 104 Section 20. Renewal Option................................................. 106 Section 21. Miscellaneous........ ......................................... 107 (a) Severability, Amendment, and Construction...................... 107 (b) GOVERNING LAW.................................................. 107 (c) Notices........................................................ 108 (d) Lessor's Right to Perform for Lessee........................... 108 (e) Counterparts................................................... 108 (f) Quiet Enjoyment................................................ 108 (g) Brokers........................................................ 109 (h) Investment of Funds............................................ 109 (i) Entire Agreement; Amendment.................................... 110 (j) Expenses....................................................... 110 (k) Federal Bankruptcy Code........................................ 110 (l) U.S. Registration Number....................................... 110
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Page ---- (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial......................110 (n) Limitation on Recourse................................112 (o) Successor Trustee.....................................113 (p) Article 2-A of the UCC................................113
iv 122 ANNEXES Annex I - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Aircraft Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 3 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Assignment of Permitted Sublessee v EX-4.26 27 RESTATED AIRCRAFT LEASE AGREEMENT[GPA 1990 AWA-13] 1 EXHIBIT 4.26 THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1990 AWA-13] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, FLEET NATIONAL BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-13] DATED AS OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY FLEET NATIONAL BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF. - -------------------------------------------------------------------------------- AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1990 AWA-13] Dated as of September 21, 1990 Amended and Restated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as amended Lessor and AMERICA WEST AIRLINES, INC. Lessee One Airbus A320-231 Aircraft Manufacturer's Serial No. 091 U.S. Registration No. N634AW - -------------------------------------------------------------------------------- 2 AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of September 21, 1990 and amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as defined in the Pass Through Trust Agreement); and the term 3 "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or elect or cause the direction or election of the management and policies of a Person whether by contract or otherwise. "Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement d'interet economique formed under the laws of the French Republic, and its successors and assigns. "Aircraft" shall mean the Airframe leased hereunder and described in Lease Supplement No. 1 (or any airframe from time to time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any Engine substituted therefor hereunder) with respect to such Airframe, whether or not any such initial or substituted Engines may from time to time no longer be installed on the Airframe or may be installed on any other airframe, (ii) Parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Aircraft Records and Documents and all other logs, manuals and records with respect to such Aircraft, and (v) all substitutions, replacements and renewals of any and all thereof. "Aircraft Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft (except Engines or engines from time to time installed thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such model aircraft (except Engines or engines from time to time installed thereon) which may from time to time be substituted for such aircraft (except Engines or engines from time to time installed thereon) pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same shall be incorporated or installed on or attached to the Airframe, or so long as title thereto shall remain vested in Lessor in -2- 4 accordance with the terms of Section 9 hereof after removal from the Airframe; provided, however, that at such time as an aircraft (except Engines or engines from time to time installed thereon) shall be deemed part of the property leased hereunder in substitution for the Airframe pursuant to the applicable provisions hereof and the replacement Airframe shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), the replaced Airframe shall cease to be the Airframe hereunder. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that such Aircraft, Airframe, Engine or Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Aircraft as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal -3- 5 pursuant to Section 18 in which case only Lessor shall select such appraiser (which appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Aircraft shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to Section 4(a)(i). -4- 6 "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 3. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Buyer Furnished Equipment" shall mean the equipment which was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar equipment furnished to Lessee. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. -5- 7 "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. "Consent and Guaranty" shall mean the Amended and Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated as of December 30, 1988, in the form attached to the Purchase Agreement. "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean September 28, 1990, being the date the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) each of the two IAE Model V2500 engines listed by manufacturer's serial number in Lease Supplement No. 1 and initially installed on the Airframe covered by such Lease Supplement, whether or not from time to time thereafter no longer installed on the Airframe or installed on any other aircraft or airframe, and (ii) any replacement engine which may from time to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for any Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. The term "Engines" -6- 8 means, as of any date of determination, both Engines then leased hereunder. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Aircraft, Airframe or either Engine: (a) loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days, but in no event later than the last day of the Term; (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any law, rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted -7- 9 Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing on the last day of the Term; or (h) as otherwise provided herein. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe which is a part of such Aircraft. An Event of Loss with respect to an Engine shall not, absent an Event of Loss with respect to the Airframe, be deemed an Event of Loss with respect to the Airframe. "Excluded Property" shall have the meaning set forth in Section 9(b) hereto. "Expiration Date" shall mean the date specified in Lease Supplement No. 3, on which date the Basic Term of this Lease shall expire. "FAA" shall mean the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head Lessee to Lessor. "Federal Aviation Act" shall mean the sections of Title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. -8- 10 "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass Through Trust Agreement and each supplement thereto and any certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Aircraft by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its operations. -9- 11 "Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee (in its individual capacity and as trustee under the Pass Through Trusts), the Subordination Agent and each Liquidity Provider, and their respective successors and permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), and any combination thereof and their respective officers, directors, agents, servants, employees, subsidiaries, Affiliates and shareholders. "Indenture" shall mean the Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, and amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture computed on the basis of a 360-day year and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. -10- 12 "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1990 AWA-13] No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1990 AWA-13] No. 2 dated December 31, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 3" shall mean Lease Supplement [GPA 1990 AWA-13] No. 3, substantially in the form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Aircraft hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against Indenture Trustee in its -11- 13 individual capacity (and not as Indenture Trustee) not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Aircraft, the Airframe, any Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative -12- 14 Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Aircraft, the Airframe, either Engine, the Trust Estate, the Operative Documents or the Financing Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20 (except Liens resulting from a transfer not permitted by such Section ) of this Lease or pursuant to Section 10 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other maintenance program for the Aircraft which is approved by the aviation authority of the country of registry and complies with the requirements applicable to maintenance of the Aircraft contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Airframe, Engines, and components of the Aircraft, including, but not -13- 15 limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean, collectively, Manufacturer's Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be applicable in any given circumstance, together in each case with any subcontractor or supplier thereof. "Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French societe a responsabilite limitee, which as of the date hereof is owned by Airbus Industrie. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, any sublease, the Tax Indemnification Agreement, the Financing Documents, and any certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Aircraft Lease Agreement [GPA 1990 AWA-13], with respect to the Aircraft, dated as of September 21, 1990, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect -14- 16 immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, and amended and restated as of the Restatement Date, between the Original Head Lessee and Owner Participant, as amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a Connecticut corporation. "Original Sublease" shall mean the Initial Sublease (as defined in the Original Head Lease) as in effect immediately prior to the Restatement Date. "Other Leases" shall mean the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, each as amended, supplemented or otherwise modified from time to time. "Other Letters of Credit" shall mean any and all letters of credit pursuant to Section 8(l) of the Other Leases. -15- 17 "Owner Participant" shall mean _________________________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Partial Assignment" shall mean the A320 Partial Assignment, Assumption, Release and Amendment Agreement, dated as of December 30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified. "Participation Agreement" shall mean the Participation Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named therein, as amended by the Letter Agreement dated as of July 29, 1993, as the same may be further amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (excluding complete Engines or engines), including Buyer Furnished Equipment, which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Airframe or any Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Airframe or Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). -16- 18 "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Amended and Restated Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as partially assigned to Parent pursuant to the Partial Assignment, to which Airbus Industrie, as guarantor, has consented, and as the same may from time to time be further amended, supplemented or otherwise modified to the extent permitted by the terms thereof. "Purchase Documents" shall mean the Purchase Agreement, the Partial Assignment and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment -17- 19 of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Renewal Rent Payment Date shall be made on the next succeeding Business Day. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Airframe" and "Replacement Engine" shall have the meanings specified in accordance with their description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. "Return Occasion" shall mean the event that occurs when possession of the Aircraft is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral -18- 20 pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20 (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Airframe or such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth, on Exhibit A hereto. "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of (a) an -19- 21 incipient Event of Loss and the operation of Section 11 hereof or (b) the need to correct any failure of the Aircraft to satisfy the requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this definition of "Supplemental Rent", as the case may be, not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Pro Rata Share" means as of any date of determination a fraction the numerator of which is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "equipment notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, and as amended and restated as of November 26, 1996, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any -20- 22 penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Taxing Authority" shall have the meaning specified in Section 10(a). "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20, the Renewal Term, in either case as extended or deemed extended as a result of the occurrence of an event described in clause (iii) to the definition of "Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990 as amended by Trust Supplement No. 1 and as further amended by Trust Supplement No. 2 between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include each Trust Supplement. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1 and Trust Supplement No. 2 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1990 AWA-13] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1990 AWA-13] No. 2 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. -21- 23 "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Aircraft or the Airframe and Engine or engines installed thereon at that time to a third party pursuant to which such Aircraft or the Airframe and Engine or engines (i) shall be operated solely by regular employees of Lessee possessing all current certificates and licenses required under the Federal Aviation Act (it is understood that cabin attendants need not be regular employees of Lessee) and Lessee otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee in accordance with its normal maintenance practices and this Lease, and otherwise the insurance required hereunder shall be maintained and the Aircraft shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term. (a) Time of Delivery. The Aircraft was delivered to Lessee, and Lessee accepted delivery of the Aircraft, on September 28, 1990. (b) [Intentionally Left Blank] (c) Acceptance of Aircraft. The Aircraft leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. -22- 24 Section 4. Rent. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in arrears as set forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable ten (10) Business Days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to the terms hereof shall survive the expiration or termination of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon, and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed -23- 25 to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in the City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except for all Excepted Payments. All Excepted Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft (subject to the provisions of Section -24- 26 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any sublease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or -25- 27 in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR -26- 28 NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has, the right to lease the Aircraft hereunder and (y) on the Delivery Date the Aircraft was free of Head Lessor's Liens and on the Restatement Date the Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) -27- 29 shall survive the execution and delivery of this Lease and the delivery of the Aircraft and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Aircraft continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or airframe or propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect thereto under the Purchase Agreement (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Aircraft), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY -28- 30 MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or either of the Engines or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject any Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that no transfer of the registration of any Engine shall be effected in connection therewith; and provided, further, that (A) no such agreement or arrangement contemplates, results in or requires the transfer of title to any Engine, and (B) if Lessor's title to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and not an Event of Default and Lessee shall comply with Section 11(b) hereof in respect thereof; (2) deliver possession of the Aircraft, the Airframe or any Engine to the manufacturer thereof, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on such Aircraft, Airframe or Engine or any part thereof or for alterations or modifications in or additions to such Aircraft, Airframe or Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Aircraft or the Airframe to the United States of America or any instrumentality or agency thereof pursuant to a sublease; -29- 31 (4) (i) subject the Airframe to the Civil Reserve Air Fleet Program and transfer possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; or (ii) subject the Airframe to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install an Engine on an airframe (other than the Airframe) owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or engines installed thereon; (6) install an Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that each Engine leased to Lessee hereby shall not become subject to the Lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of such Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the -30- 32 owner of such Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install an Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine and Lessee shall comply with Section 11(b) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in such Engine under applicable Law until compliance by Lessee with such Section 11(b); (8) enter into a Wet Lease for the Aircraft or the Airframe and engines installed thereon in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee shall enter into any Wet Lease for a period of more than six months (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given at least ten (10) Business Days prior to entering into such Wet Lease); or (9) sublease the Aircraft or the Airframe to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section -31- 33 6(a) hereof (other than the transfer of an Engine which is deemed to have been an Event of Loss) and any Wet Lease shall be expressly subject and subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of the Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable; (6) The sublessee under any Permitted Sublease, in its consent thereto, shall confirm that from and after the occurrence and continuance of an Event of Default and, unless an Event of Default specified in Section 17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease being deemed or declared -32- 34 in default, Lessor (and, so long as the Lien of the Indenture shall not have been discharged, Indenture Trustee) shall be entitled to enforce directly and in its own name all representations, warranties, indemnities, covenants and agreements under the applicable Permitted Sublease; and (7) Each Permitted Sublease shall (A) provide that (I) the Aircraft or Airframe may not be operated or used other than as provided in this Lease and shall be maintained and operated as required hereunder, (II) Lessor may avoid or terminate such sublease following an Event of Default hereunder and (III) to the extent not accomplished by an assignment of the Permitted Sublease, upon the occurrence of an Event of Default hereunder, Lessee's rights under such Permitted Sublease shall automatically be deemed assigned to Lessor; and (B) be a "net lease" in accordance with industry practice and shall be comparable to, or more restrictive than, this Lease and under such Permitted Sublease (except a sublease to the United States Government or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor under such Permitted Sublease, must be entitled to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted Sublease shall contain provisions regarding such Section 1110 which are substantially the same as the related provisions of this Lease. In addition, from and after the occurrence and continuance of an Event of Default, all rent and other amounts payable by the Permitted Sublessee under such Permitted Sublease shall be paid directly to Indenture Trustee and, upon discharge of the Lien of the Indenture, to Lessor. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Aircraft or the Airframe to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United -33- 35 States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Aircraft in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Aircraft by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Aircraft, to the registry of the Aircraft in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify -34- 36 to do business in such jurisdiction and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. Any Permitted Sublease shall expressly provide that the rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under the other Operative Documents or constitute a waiver of Lessor's rights or remedies hereunder or under the other Operative Documents, and such rights shall continue as if such Permitted Sublease had not occurred. Any Permitted Sublease shall expressly prohibit any further sub-sublease or assignment or any other similar transfer of the Aircraft, Airframe or any Engine or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease together with an assignment, as security for Lessee's obligations hereunder, of such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days following the effective date of such Permitted Sublease. (b) Reciprocal Recognition of Rights. In the event the lessor or secured party of any airframe leased to -35- 37 Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or other security agreement in accordance with Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement covering such airframe also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement, Lessor hereby agrees for the benefit of such lessor or secured party that Lessor will not acquire or claim, as against such lessor or secured party, any right, title or interest in any such engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease or conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. Lessor also hereby agrees for the benefit of the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as against such mortgagee, any right, title or interest in any engine subject to the lien of such mortgage as the result of such engine being installed on the Airframe at any time while such engine is subject to the lien of such mortgage. (c) Lawful Insured Operations. Lessee will not permit the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, any manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the Aircraft is registered with the FAA, or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Aircraft or impair the interest of Lessor therein or impair the validity or priority of the -36- 38 Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Aircraft during the Basic Term or the then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Aircraft, or suffer or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, any other applicable rules, regulations and requirements by any other applicable Governmental Entity, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in -37- 39 the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by Lessee without discrimination and as if Lessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by the central civil aviation authority of the country of registry, and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such condition as is necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times under the Federal Aviation Act and any other applicable law, or the applicable laws of any other jurisdiction in which the Aircraft may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the Aircraft at all times, at its expense, to be duly registered during the Restricted Use Period and, subject to Section 11 of the Refunding Agreement, thereafter under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as (i) while the Aircraft is registered under the Federal Aviation Act, each of the Lessor or its successors or assigns is a "citizen of the United States" as -38- 40 defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not register the Aircraft or permit the Aircraft to be registered under any Laws other than the Federal Aviation Act at any time except as provided in Section 11 of the Refunding Agreement and shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Aircraft and this Lease at all times. At any time after the Restricted Use Period, Lessor, upon compliance with all of the terms of Section 11 of the Refunding Agreement, shall, at the request and sole expense of Lessee, cooperate with Lessee to take all actions reasonably required to change the registration of the Aircraft to another country. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") in the cockpit of the Aircraft and on each Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a location reasonably adjacent to and not less prominent than the airworthiness certificate for the Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Aircraft or either Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Airframe and Engines to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause any sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee on reasonable prior notice at reasonable times to visit, -39- 41 inspect and survey the Aircraft (including, without limitation, a visual "walk around" inspection which may include going on board the Aircraft, and inspecting the Aircraft during maintenance checks when panels and bays are open and subject to view), its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as no Default or Event of Default has occurred hereunder inspections shall be endeavored to be performed during regularly scheduled maintenance checks of the Aircraft. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Airframe or any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial -40- 42 position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Aircraft, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an -41- 43 Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vi) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Aircraft, either Engine or any Part with a repair or replacement cost (including labor charges) in excess of $1,000,000; (vii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (viii) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Aircraft, the Airframe or either Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with -42- 44 or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets (in one or a series of transactions) to any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the Laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. -43- 45 No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Aircraft as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its Federal and state income tax returns (or to permit the filing of the Federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Aircraft, the Airframe or the Engines. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Aircraft, Airframe or Engines only in commercial passenger operations and related cargo operations. Unless Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the Aircraft, Airframe or Engines to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Aircraft, Airframe or Engines for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the -44- 46 Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft to be operated in any member state of the European Union or other European country, Lessee shall deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all aircraft (including, without limitation,the Aircraft) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this amended and restated Lease unless it had available to it the benefits of a lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Aircraft hereunder. The acknowledgement, covenant and agreement contained in this Section 8(i) shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by the Lessor, the Owner Participant and, if the Lien of the Indenture has not been discharged, the Indenture Trustee. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Aircraft, the Airframe, any Engine or Part or the execution, delivery or performance of this Lease or the enforcement thereof against Lessee. -45- 47 (k) Security Opinion; Annual Certificate. (i) During such times that the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Lessor's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Aircraft is registered under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section -46- 48 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (l) Letter of Credit. As security for the obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default has occurred, which amount may be applied, retained or utilized as provided in the penultimate paragraph of this Section 8(l). (ii) be maintained in full force and effect at all times until ninety-one (91) days after the Expiration Date with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that a Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited, will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long term unsecured debt rating at least equal to its rating on the date hereof; -47- 49 (iii) be expressly designated as transferrable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term, or the Lessor is holding proceeds of the Letter of Credit that were retained and not applied as provided herein then Lessor shall return the Letter of Credit to Lessee or terminate it and/or return any retained and unapplied proceeds, ninety-one (91) days following the date of such expiration or other termination of this Lease so long as no Default or Event of Default has occurred or is continuing hereunder or under any Other Lease, upon payment in full of all amounts then due and owing to Owner Trustee and Owner Participant under the Operative Documents. If an Event of Default has occurred or is continuing under this Lease or an Event of Default has occurred or is continuing under any Other Lease (as therein defined), in addition to any other rights and remedies Lessor may have hereunder, under any Other Lease, any sublease and any and all other remedies available at Law (including, without limitation, the Uniform Commercial Code as adopted in New York) or equity and upon exercising its rights under the Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to (i) hold any amounts drawn under the Letter of Credit or Other Letters of Credit as security for Lessee's obligations under this Lease or the Other Leases, (ii) retain any amounts drawn under the Letter of Credit or Other Letters of Credit for its own account and apply (including, without limitation, by way of set off against) such drawn amounts as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease and the Other Leases) to remedy any breach by Lessee of this Lease or any other Operative Documents or Other Leases or (iii) recompense Lessor, Owner Participant or any of their respective Affiliates for any loss, damage, cost or expense or other Claim due or owing hereunder or under the Other Leases; provided, however, that in the case of any drawing in respect of any claim for the payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts which would (absent such Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders); provided further, however, that neither the amount so applied at any one time nor the aggregate amount so applied at different times shall reduce the amount of any installment or payment of Rent (whether -48- 50 upon the termination of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in full the amounts required to be paid on account of the principal of and any interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or credit with respect to any amounts so applied. Any amount retained shall be considered the property of Lessor and Lessor may commingle such amount with its general funds and Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum extent permitted by applicable Law, any interest therein. Lessee shall not be entitled to any interest or other earnings on such retained amount and such amount shall not be refundable. On application of all or any portion of the amounts drawn under the Letter of Credit or any Other Letters of Credit in accordance with this Section 8(l), or the Other Leases, Lessee shall on demand reinstate the amount of the Letter of Credit or Other Letters of Credit, as the case may be, to its or their full Face Amount or provide to Lessor one or more additional Letters of Credit meeting the requirements of this Section 8(l), so that the Letter of Credit and each of the Other Letters of Credit at all times equals the original Face Amount provided for herein. During such times as Lessor shall elect to hold all or part of the proceeds of the Letter of Credit or Other Letters of Credit as security for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee shall not be obligated to reinstate the amount of the Letter of Credit or Letters of Credit, as the case may be, in respect of the proceeds so held. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as -49- 51 possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). All Parts which are at any time removed from the Aircraft shall remain the property of Lessor, subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Aircraft and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Aircraft as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine to the extent made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Airframe, Engines or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) -50- 52 may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Airframe, either Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Airframe, Engines and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Aircraft as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Aircraft on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Aircraft without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Aircraft would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Aircraft (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, -51- 53 if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Aircraft, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Aircraft in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Aircraft as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Aircraft. Notwithstanding any other provision hereof, and without limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted Sublessee) may install in the Aircraft audio visual, entertainment or telephonic -52- 54 equipment (including seats with such equipment installed therein) (any or all of which are hereafter referred to as "Excluded Property") in the ordinary course of business, and Lessor shall not claim or acquire title thereto and the rights of the owners thereof therein shall not constitute a default hereunder; provided that (i) any such Excluded Property shall be removed prior to the date of a Return Occasion without causing any damage to the Aircraft and without diminishing or impairing the value, utility, remaining useful life or condition which the Aircraft would have had at such time had such Excluded Property not been installed, (ii) any equipment or seats which such Excluded Property replaces shall be properly stored with the interests of Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee or warehouse, and properly reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are required as a result of such removal and/or reinstallation. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Aircraft, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Airframe or either Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided the Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected -53- 55 to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of and transferring title to Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee provided that in any circumstance in which the Lessor is -54- 56 required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or otherwise, with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, by any federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) the Aircraft, the Airframe, any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re-registration, deregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest -55- 57 in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any modification or reissuance, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, Taxes imposed on, based on, or measured by, the gross or net income of such Indemnitee or Taxes in lieu thereof (including minimum taxes, withholding taxes and taxes on or measured by any item of tax preference) imposed by the federal government of the United States of America (other than taxes in the nature of sales or use taxes, license taxes, or property taxes), (ii) In the case of any Indemnitee, Taxes imposed on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any state, local or foreign government or taxing authority (other than Taxes in the -56- 58 nature of sales Taxes, use Taxes, license Taxes or property Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which arise out of or are caused by any gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee or any sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (A) an Event of Default and the exercise by any Indemnitee of its remedies under this Lease or the Indenture, as the case may be or (B) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms hereof; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed on a transferee of such Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any Part or any interest in the Operative Documents to the extent the amount of any such Taxes exceeds the amount of such Taxes that would have been imposed had there not been any such transfer, unless such transfer results from action by or on behalf of such Indemnitee taken in connection with any Event of Default that has occurred and is continuing or upon the request of the Lessee, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this -57- 59 Section 10(b) or to a failure by Lessee to satisfy its obligations related to such return, (vii) With respect to an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, Taxes which arise out of or are caused by (i) any act or omission or material misrepresentation of any Indemnitee where such act or omission is not permitted by the Financing Documents or the Operative Documents, or (ii) a failure by an Indemnitee to fulfill its contest obligations, and, in the case of the Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a result of a breach of such Indemnitee's representations, warranties, or covenants contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any material respect, or from a failure by such Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Aircraft, (ix) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust, or (x) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) in the case of an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (other than taxes which are in the nature of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee (A) -58- 60 by any state or local Taxing Authority other than Taxes imposed by any such state or local jurisdiction in which the Indemnitee has its principal place of business or is subject to such Tax as a result of business transactions or other presence unrelated to the transactions contemplated by the Financing Documents or the Operative Documents, unless such Taxes are imposed by such jurisdiction solely as a result of (x) the operation of the Aircraft in such jurisdiction or (y) the transactions contemplated by the Operative Documents, to the extent such taxes are directly attributable to such operation of the Aircraft or to such transactions, and (B) by any foreign jurisdiction which are imposed as a result of Lessee's or sublessee's activities in such foreign jurisdiction in connection with the transactions contemplated by the Financing Documents or the Operative Documents, provided, however, a Covered Income Tax also includes the incremental amount of franchise taxes, taxes on doing business, capital stock taxes or taxes on, based on or measured by gross or net income of the original Owner Participant attributable to the Lease (excluding, however, any taxes that would be excluded under any provision other than clauses (i) and (ii) of subsection (b) of this Section 10) which are imposed by the "Home State" of a sublessee (the Home State of a sublessee being the jurisdiction in which such sublessee maintains its principal operations and maintenance center), or in the absence of a Permitted Sublessee, the jurisdiction where the Aircraft is stored, but only to the extent such incremental taxes result from activities of Lessee or Permitted Sublessee under the Lease in or with respect to the Home State or the jurisdiction where the Aircraft is stored, and taking into account in calculating such incremental taxes all state tax benefits and savings in the Home State resulting from activities of Lessee or Permitted Sublessee under the Lease, disregarding for such purpose any actual or constructive changes in ownership of the original Owner Participant, provided, however, that Owner Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's liability for indemnity payments attributable to taxes incurred in sublessee's Home State with respect to each Permitted Sublessee; and (ii) in the case of the Indenture Trustee or the Trust Indenture Estate, any Tax based on or measured by gross or net income, receipts, capital or -59- 61 net worth, franchises, excess profits or conduct of business (including minimum taxes, withholding taxes, and taxes on or measured by any item of tax preference) imposed on such Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to the Owner Participant or Owner Trustee or will notify the Owner Participant or Owner Trustee of such requirement and make such report or return in such manner as shall be reasonably satisfactory to Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient -60- 62 of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of Taxes imposed on the Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest federal corporate income tax rate applicable to Owner Participant in the year of payment and the highest corporate income tax rate in the jurisdiction in which Owner Participant files a consolidated state income tax return (currently Virginia). (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (ii) the reduction calculated on the same basis as the gross up in Section 10(e) hereof in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (i) above would exceed (A) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (B) the portion of all prior payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an -61- 63 indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. In the event that an Indemnitee receives a written notice of a claim which, if sustained, would require the payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's sole expense, in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in whole or in part separately in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, the Lessee shall not be permitted to contest in the name of such Indemnitee if such contest involves Taxes imposed against such Indemnitee that are unrelated to the transactions contemplated by the Financing Documents or the Operative Documents or Taxes based on or measured by the gross or net income of the Indemnitee, and provided, that if the Indemnitee determines in good faith -62- 64 that there is a material possibility of a material adverse impact upon the Indemnitee with respect to such contest, such Indemnitee may retain or reassert control of any contest that Lessee would otherwise be permitted to contest; provided, further, that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) Lessee shall have (a) furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352) exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), provided however, that in the event the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of tax counsel, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which the Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of statutory changes-in-law, it is as likely as not that the position will prevail, and (b) agreed to pay Indemnitee for all reasonable costs and expenses which Indemnitee may incur in contesting such claim (including without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayment of estimated taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interests), (ii) a threshold amount of $50,000 for any individual claim is at issue, (iii) there is no substantial risk or danger of the sale, loss or forfeiture of the Aircraft, (iv) Lessee shall have admitted its liability to indemnify Owner Participant for such claim or set forth in writing why it is not so liable, -63- 65 (v) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, the Lessee shall have advanced to such Indemnitee sufficient funds (on an interest free basis) to make such payments, (vi) no claim shall be appealed to the U.S. Supreme Court, (vii) no appeal of a trial court decision shall be undertaken unless Lessee at its sole cost and expense shall have furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that Indemnitee is more likely than not to prevail in such appeal, and (viii) no Event of Default has occurred and is continuing. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released -64- 66 from its responsibility to contest such claim or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include any member of such affiliated group. (l) Verification. At Lessee's request, the amount of any indemnity payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified by an independent public accounting firm selected by such Indemnitee and reasonably satisfactory to Lessee. In order to enable such accountants to verify the indemnity amount, such Indemnitee shall provide to the accountants (for their own confidential use) information reasonably necessary for such verification to which Lessor has access; provided, however, such information shall not be disclosed to Lessee or any person other than such accountants. The fee of such firm shall be payable by Lessee unless such verification shall result in an adjustment in Lessee's favor exceeding 10% of the amount of the indemnity payment. (m) Survival. All of the obligations and rights of Lessee and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the Engines or any Part thereof shall survive the assignment, or expiration or other termination, of the Lease with respect to the Aircraft for a period of six (6) years from the occurrence of such assignment, or expiration or termination, except that such obligations shall survive the expiration of such six (6) year period with respect to any claim asserted prior to the expiration of such six (6) year period but in either case only to the extent such obligation or claim relates to events which occurred or conditions which existed during the Term. Such obligations are expressly undertaken by Lessee for the benefit of, and shall be enforceable by, Lessor. The provisions of this Section 10(m) are subject to the exclusions of Section 10(b)(viii). -65- 67 Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Airframe. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Airframe or the Airframe and any Engines then installed thereon, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Airframe and such Engines then installed thereon, title to a replacement Airframe (together with the same number of replacement Engines as the Engines), such replacement Airframe and Engines (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe and replacement Engines may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and to be in at least as good operating condition as, the Airframe and the Engines, if any, so replaced (assuming the Airframe and the Engines were maintained in accordance with the requirements of this Agreement, whether or not they are in fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988 and, in the case of Engines, in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to -66- 68 comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and the Engines suffering the Event of Loss as well as all of Lessor's right, title and interest in and to any Engine constituting part of the Aircraft and replaced as provided above but not installed thereon at the time of the Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed part of the property leased hereunder and shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in replacement of the Airframe or Engines under this Section 11(a)(i) shall result in any reduction of Rent. (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss (or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last day of the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, in effect on the last day of the Term, for each day from and including the last day of the Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are -67- 69 paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and Engines suffering the Event of Loss, as well as all of Lessor's right, title and interest, if any, in and to any Engine constituting part of the Aircraft but not installed thereon at the time of the Event of Loss. (b) Event of Loss with Respect to an Engine. Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine and is suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, free of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence -68- 70 of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens), and is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), -69- 71 Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein and shall be deemed part of the same Aircraft as was the Engine replaced thereof. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Conveyance of Replacement Airframe. Prior to or at the time of any conveyance of a replacement Airframe pursuant to Section 11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the following documents which shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect on said date: (i) a full warranty bill of sale, in form and substance satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be approved by the FAA on said date), executed by the owner thereof, in favor of Lessor and, cause supplements, reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), to this Lease, the Indenture (if then in effect) and the Trust Agreement (if then in effect), with respect to such replacement Airframe and to be duly filed for recordation pursuant to the Federal Aviation Act or other applicable Governmental Entity; (ii) the certificate specified in Section 12(f) hereof demonstrating compliance with the insurance requirements of Section 12 with respect to the replacement Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such other evidence of title as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request) to the effect that, upon such conveyance, Lessor will acquire good title to such replacement Airframe free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe may be subject to Permitted Liens), that such replacement Airframe will be leased hereunder to the same extent as the Airframe replaced thereby and will be subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant -70- 72 Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and Replacement Engine and the Lien of the Indenture on such Replacement Airframe and Replacement Engine; and that Lessor, and Indenture Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement airframe and engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement; (iv) a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (v) such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(c), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(c), in each case in form and substance satisfactory to each such party, including evidence that the Aircraft of which the replacement Airframe is a part has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of this Lease and application for registration of such replacement Airframe in the name of Lessor has been duly made with the FAA or other applicable Governmental Entity and Lessee has temporary or permanent authority to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code financing statements covering the replacement Airframe as may be reasonably requested by Lessor or Indenture Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal prepared in accordance with the Appraisal Procedure which confirms that the replacement Airframe and any replacement Engine has a value, utility and remaining useful life at least equal to that of the Airframe and Engines which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of this Lease whether or not they are in fact so maintained; and (ix) furnish Owner Trustee and -71- 73 Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe is free and clear of Lessor's Liens), all of Lessor's right, title and interest in and to the Aircraft which suffered the Event of Loss. No Event of Loss with respect to the Aircraft under the circumstances contemplated by the terms of this Section 11(c) shall result in any reduction in Rent. For all purposes of this Lease, each such replacement Aircraft (together with any Engines constituting part of the Aircraft being replaced as to which an Event of Loss has not occurred) shall be deemed part of the property leased hereunder and shall be deemed the "Aircraft" as defined herein. (d) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer (including a Governmental Entity providing an indemnity in lieu thereof) with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other than insurance or such indemnity proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and other payments, if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section -72- 74 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (e) Requisition for Use by Government with Respect to the Aircraft. Subject to Section 11(f) below, in the event of the requisition for use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other than a requisition constituting an Event of Loss), Lessee shall promptly notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) thereof and all of Lessee's obligations under this Lease with respect to such Airframe or Engine shall continue to the same extent as if such requisition had not occurred. All payments received by Lessor or Lessee from the Governmental Entity for the use of such Airframe or Engine during the Term shall be paid over to, or retained by, Lessee if no Default or Event of Default shall have occurred and be continuing; and all other payments received by Lessor or Lessee from the Governmental Entity shall be paid over to, or retained by, Lessor. If the Airframe and such Engines or engines are not returned by the end of the Term, an Event of Loss shall be deemed to have occurred on the last day of the Term and, on the last day of the Term, Lessee shall either pay to Lessor the amount provided herein for an Event of Loss to the Airframe and such Engines or engines on such date or provide a replacement Aircraft and Engine on such date in the condition provided for in Section 16 and Exhibit E. In the event of the requisition for use by the Governmental Entity of any Engine without the requisition for use of the Airframe, Lessee will replace such Engine hereunder by complying with the terms of Section 11(b) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (f) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all -73- 75 such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability products, completed operation liability covering maintenance of aircraft, but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Aircraft, in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured or -74- 76 additional insured by any act or omission of Lessee or any other insured or additional insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured or additional insured of any breach or violation by Lessee or any other insured or additional insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage), after notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft is located or operated, and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, or the other Indemnitees, or their respective permitted assigns, with respect to the Aircraft. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that -75- 77 carried by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the consent of Lessee) covering the Aircraft, and "all-risk" coverage including transit insurance with respect to Engines and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull insurance reasonably acceptable to Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly-sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged; provided that Indenture Trustee shall not be obligated to request such insurance and shall not be liable for any failure to request such insurance. Anything herein to the contrary notwithstanding, at all times while the Aircraft is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Aircraft. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the -76- 78 other Indemnitees than that carried by Lessee with respect to similar-size aircraft owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Aircraft, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured -77- 79 against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Aircraft, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee, as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which -78- 80 arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and any other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance -79- 81 proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Aircraft and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Aircraft complies with the terms of this Lease. Lessee will cause the Approved Broker -80- 82 to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris if the relevant primary insurer shall have obtained reinsurance and such reinsurance (i) is on the same terms as the original insurance and includes the provisions required by this Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contains a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it -81- 83 being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for passenger aircraft of similar size as the Aircraft in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on a net after-tax -82- 84 basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims (whether or not based on strict liability), damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, costs and expenses set forth in Section 21(j) hereof and reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee, from (and including) the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Aircraft to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations thereunder or to file the documentation necessary to continue FAA registration of the Aircraft), delivery, nondelivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' -83- 85 Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such defect shall be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the -84- 86 Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder or thereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part -85- 87 thereof, either in the air or on the ground, or which may be caused by any defect in such Aircraft, Airframe, Engine, engine or Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of the location of such Aircraft at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents (except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the -86- 88 period prior to such disposition), (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee has the right to control the defense thereof is materially -87- 89 prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section . Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Aircraft or of the residual value of the Aircraft. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease or any of the other Operative Documents and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) -88- 90 inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except -89- 91 it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor, cause any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease, and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture -90- 92 Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Aircraft or Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Section 16. Return of Aircraft and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Aircraft to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree, fully equipped with all required Engines, or other engines owned by Lessee (which shall thereupon become Engines as hereinafter provided) meeting the conditions specified in this Section and Exhibit E, duly installed thereon by delivering the same to the Lessor at such location. Lessee shall comply with Section 11(b) and this Section 16 with respect to any engines installed on the Aircraft returned to Lessor hereunder and meeting the conditions described herein which were not originally installed on the Aircraft. (b) Status Upon Return. Upon any Return Occasion hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act and with a current and valid Airworthiness Certificate -91- 93 installed on the Aircraft, unless such certificate shall have been suspended or revoked as a result of the suspension or revocation of the registration of the Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft to be registered in the name of Lessor under the Federal Aviation Act (whether by means of a voting trust agreement or otherwise) in which case the Aircraft shall nevertheless meet all conditions for such certification and for the issuance of such certificate; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Aircraft to be operated under, and in full compliance with, such Airworthiness Certificate and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense with respect to effecting such registration, duly registered in the name of the Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vii) in good and airworthy operating condition, and in the same condition (including, without limitation, in a passenger configuration suitable for passenger revenue service) as when delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (viii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Engines. In the event any engine not owned by Lessor shall be installed on the Aircraft on any Return Occasion, without limiting Lessee's obligations under the -92- 94 Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engines or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engines, assuming the Engines were in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens. (d) Records and Documents. Upon the return of the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Aircraft, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Aircraft and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Aircraft under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Aircraft under the Maintenance Program, in each case as Lessor may reasonably request, and all documentation with respect to the Aircraft set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Aircraft on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of -93- 95 Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Aircraft, Airframe, Engines, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an aircraft which has been operating in regulated commercial air service, shall be delivered to Lessor with the Aircraft. Any documents or records required to be delivered hereunder shall be in English. (e) Condition of Aircraft. Upon any Return Occasion, Lessee shall return such Aircraft to Lessor in such condition that the Aircraft shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Aircraft available to Lessor at the location where the "block 'C' Check" (or equivalent level designated check or checks) required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding -94- 96 compensation to representatives of Lessor), in order to verify that the condition of such Aircraft complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such "block 'C' Check" (or equivalent level check or checks) and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such "block 'C' Check" is being performed and shall have such duration as to permit the opening of any areas of the Aircraft which are necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Aircraft and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to the Aircraft undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations hereunder continued, on a daily basis until the Final Inspection shall have been concluded and Lessee shall pay Rent during any such extension in an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value during such extension shall equal the Stipulated Loss Value on the last day of the Basic Term or Renewal Term, as the case may be); provided, however, that Lessee shall not be required to pay Rent with respect to the Aircraft during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Aircraft Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where -95- 97 the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Aircraft. (h) Corrections and Subsequent Corrections. To the extent that the Aircraft or any Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as such Aircraft is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of such Aircraft and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of such Aircraft, at commercial rates then charged by the Person selected by Lessor to perform such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. Nothing set forth in this paragraph shall constitute a limitation on Lessor's or Owner Participant's ability to recover from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the return of the Aircraft at the time, in the place and in the condition as specified in this Section 16 and Exhibit E hereto. (i) Functional Flight Check. Immediately prior to the expiration of the Term, Lessor will be permitted to conduct a non-commercial functional flight check flight of no more than two (2) hours duration in accordance with the Manufacturer's functional flight check procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft and proper functioning of all systems and components. A qualified pilot and up to five (5) other representatives selected by Lessor may take part in such flight to verify compliance of the Aircraft with the requirements of this Lease, provided, that Lessor shall be responsible for the charges of such qualified pilot and representatives. Lessee may combine the functional flight check provided in this Section 16(i) with the delivery flight specified in Section 16(a) and such functional flight check shall include the landing. Any discrepancy or -96- 98 malfunction detected during any functional flight check (including a functional flight check combined with a delivery flight) shall be corrected, at Lessee's expense, and prior to the expiration of the Term. To the extent that any actions to correct any such discrepancy or malfunction extend beyond the Term, the provisions of the first sentence of Section 16(h) shall apply. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee. (j) Export Certificate of Airworthiness. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably request to assist Lessor in obtaining any required documents in relation to the export of the Aircraft from the United States (including, without limitation, a valid and subsisting export certificate of airworthiness with respect to the Aircraft and export license) and in relation to the deregistration of the Aircraft. (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Aircraft which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Aircraft for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Aircraft after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Aircraft and the records relating thereto to the extent it does not -97- 99 unreasonably interfere with the operation or maintenance of the Aircraft or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the date on which such payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto; provided that any failure of Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless Lessor or Owner Participant delivers notice to Lessee; or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Aircraft outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Aircraft; or (c) Any representation or warranty made by Lessee herein or in the Refunding Agreement or in any certificate furnished by Lessee in connection herewith or therewith is or was incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or the Refunding Agreement, and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, -98- 100 that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c) or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other -99- 101 insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within ninety (90) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of ninety (90) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to all or any part of the Airframe and any or all of the Engines as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's cost and expense, immediately return, and the Lessee hereby agrees that it -100- 102 shall return promptly all or such part of, the Aircraft to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Aircraft) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Aircraft or any Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if such Aircraft were being returned at the end of the Term hereof with respect to such Aircraft. In addition, Lessor or Lessor's agent, at its option and to the extent permitted by applicable Law, may but shall not be obligated to enter upon the premises where all or any part of the Aircraft, Airframe and/or Engines are located to take immediate possession of and, at Lessor's option, remove the same (and/or any engine which is not an Engine but which is installed on the Airframe, subject to the rights of the owner, lessor or secured party thereof) by summary proceedings or otherwise, all without liability accruing to Lessor or Lessor's agent for or by reason of such entry or taking of possession or removal whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. (b) With or without taking possession thereof, sell or cause to be sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty -101- 103 (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Aircraft to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Aircraft for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, Airframe or Engine or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent due to and including the date of sale, plus the amount by which the Stipulated Loss Value of such Aircraft, Airframe or Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In lieu of exercising its rights under paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in advance for the period on and after the Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such -102- 104 Aircraft due and unpaid for any period prior to and including, and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss Value for the Aircraft computed as of such Stipulated Loss Value Date; and upon such payment of liquidated damages and the payment of all other Rent then due hereunder and the discharge of the Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without recourse or warranty (except as to the absence of Lessor's Liens and the Lien of the Indenture), all right, title and interest of Lessor in and to the Aircraft to Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and deliver such documents evidencing such transfer and take such further action as Lessee shall reasonably request. (f) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the Aircraft, Airframe or Engine under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, Airframe or Engine, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Aircraft which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for such Aircraft, Airframe or Engine would have expired but for Lessee's default, discounted periodically (equal to installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (g) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. -103- 105 (h) Lessor may exercise any other right or remedy which may be available to it under applicable laws, or may proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above, until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Aircraft, Airframe or Engine in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's -104- 106 property in repossessing and holding the Aircraft, the Airframe, an Engine or Part except for direct damages caused by Lessor's gross negligence or willful misconduct and (iv) shall have the right to maintain possession of and dispose of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Aircraft, the Airframe, an Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Aircraft, the Airframe, an Engine or Part pursuant to this Section , Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. -105- 107 No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d), (e) or (f) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Aircraft leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Aircraft, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. The provisions of this Section 18 shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. Section 19. Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and perfected security interest in all of Lessor's right, title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee hereby -106- 108 consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) (other than Expected Rights) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. Section 20. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): -107- 109 (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Aircraft for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, in no event less than the greater of 120% of the "fair market sales value" of the Aircraft as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. -108- 110 Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, each of Lessor and Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft or any Engine or Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Aircraft for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices and instructions between Lessor and Lessee required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). All -109- 111 notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee (until such time as the Lien of the Indenture is discharged) and to Owner Participant, at such address as Owner Participant and Indenture Trustee, respectively, may designate from time to time. All notices and instructions hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft hereunder, and all rents, revenues, profits and income therefrom, in accordance -110- 112 with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it, provided that Lessor and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, Note Holder or any other Person lawfully claiming by or through them, and provided further, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the -111- 113 subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications hereof or thereof, or waivers or consents hereunder or thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the Financing Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft similarly situated to Lessor. (l) U.S. Registration Number. At Lessee's request, Lessor shall use its best efforts to have the Aircraft registered under the United States Registration Number designated by Lessee. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United -112- 114 States District Court for the Southern District of New York. Each of Lessee and Lessor represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee or Lessor hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, it hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Each of Lessee and Lessor hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee or Lessor as from time to time may be designated by Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns (as applicable). Final (after all appeals) judgment (the enforcement of which has not been stayed) against either Lessee or Lessor obtained in any suit originally brought in the court of the State of New York in New York County or in the United States District of New York shall be conclusive, and, to the extent permitted by applicable Law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings, against Lessee or Lessor, as the case may be, or any of their assets in the courts of any country or place where such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS -113- 115 BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all purposes hereof without the -114- 116 necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease, as amended and restated by this Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] (and as otherwise extended, amended, modified, renewed or supplemented), shall be governed by Article 2-A of the Uniform Commercial Code of New York. -115- 117 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by its duly authorized officer as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:________________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:________________________________ Title: -116- 118 TABLE OF CONTENTS Page Section 1. Definitions.................................................. 1 Section 2. Agreement to Lease........................................... 21 Section 3. Delivery and Acceptance; Term................................ 22 (a) Time of Delivery................................... 22 (b) ................................................... 22 [Intentionally Left Blank] (c) Acceptance of Aircraft............................. 22 (d) Term of Lease...................................... 22 Section 4. Rent......................................................... 22 (a) Rent............................................... 22 (b) Minimum Payments................................... 23 (c) Date, Place and Method of Payment.................. 23 (d) Prohibition Against Setoff, Counterclaim, Etc.................................. 24 Section 5. Representations, Warranties and Covenants.................... 26 (a) Warranties and Disclaimer of Warranties............ 26 (b) Representations and Warranties of Lessor............................................. 27 (c) No Amendments to Financing Documents............... 27 (d) Suppliers' Warranties.............................. 27 Section 6. Possession and Use........................................... 28 (a) Possession......................................... 28 (b) Reciprocal Recognition of Rights................... 35 (c) Lawful Insured Operations.......................... 36 (d) Maintenance........................................ 37 (e) Registration and Insignia.......................... 38 Section 7. Inspection................................................... 39 Section 8. Additional Covenants of Lessee............................... 40 (a) Financial Information.............................. 40 (b) Maintenance of Corporate Existence................. 42 (c) Maintenance of Status.............................. 42 (d) Payment of Taxes................................... 42 (e) Consolidation, Merger, Etc......................... 42 (f) Information........................................ 43 (g) Place of Business.................................. 44 (h) Certain Limitations on Use......................... 44 (i) Section 1110....................................... 45 (j) Permits and Licenses............................... 45 i 119 Page (k) Security Opinion; Annual Certificate............. 45 (l) Letter of Credit................................. 46 Section 9. Replacement of Parts; Alterations, Modifications and Additions...................... 49 (a) Replacement of Parts............................. 49 (b) Alterations, Modifications and Additions........................................ 50 (c) Pooling.......................................... 52 Section 10. General Tax Indemnity..................................... 53 (a) Indemnity........................................ 53 (b) Exclusions....................................... 55 (c) Covered Income Tax............................... 57 (d) Reports and Returns.............................. 59 (e) After-Tax Basis.................................. 59 (f) Tax Benefit...................................... 60 (g) Payment.......................................... 60 (h) Contest.......................................... 61 (i) Refund........................................... 63 (j) Diligence........................................ 63 (k) Affiliated Group................................. 63 (l) Verification..................................... 64 (m) Survival......................................... 64 Section 11. Loss, Damage and Requisition.............................. 64 (a) Event of Loss with Respect to the Airframe......................................... 64 (b) Event of Loss with Respect to an Engine.......... 67 (c) Conveyance of Replacement Airframe............... 68 (d) Application of Proceeds and Payments............. 70 (e) Requisition for Use by Government with Respect to the Aircraft.......................... 71 (f) Application in Default........................... 72 Section 12. Insurance................................................. 72 (a) Public Liability and Property Damage Insurance. ...................................... 72 (b) Insurance Against Loss or Damage................. 74 (c) Application of Insurance Proceeds for an Event of Loss................................. 77 (d) Application of Insurance Proceeds for Other than an Event of Loss...................... 77 (e) Application in Default........................... 78 (f) Certificates..................................... 78 (g) Reinsurance...................................... 79 (h) Storage.......................................... 80 (i) Amounts Held..................................... 80 ii 120 Page (j) After the Term................................... 80 (k) Governmental Indemnity........................... 80 Section 13. General Indemnity......................................... 81 Section 14. Liens..................................................... 86 Section 15. Protection of Title and Further Assurances................ 87 Section 16. Return of Aircraft and Records............................ 89 (a) Return........................................... 89 (b) Status Upon Return............................... 90 (c) Engines.......................................... 91 (d) Records and Documents............................ 91 (e) Condition of Aircraft............................ 92 (f) Final Inspection................................. 93 (g) Aircraft Records and Documents................... 94 (h) Corrections and Subsequent Corrections........... 94 (i) Functional Flight Check.......................... 94 (j) Export Certificate of Airworthiness.............. 95 (k) Service Bulletin and Modification Kits........... 95 (l) Storage Upon Return.............................. 95 (m) Resale/Release Cooperation....................... 96 Section 17. Events of Default......................................... 96 Section 18. Remedies.................................................. 98 Section 19. Security for Obligations.................................. 104 Section 20. Renewal Option............................................ 106 Section 21. Miscellaneous............................................. 107 (a) Severability, Amendment, and Construction..................................... 107 (b) GOVERNING LAW.................................... 107 (c) Notices.......................................... 108 (d) Lessor's Right to Perform for Lessee............. 108 (e) Counterparts..................................... 108 (f) Quiet Enjoyment.................................. 108 (g) Brokers.......................................... 109 (h) Investment of Funds.............................. 109 (i) Entire Agreement; Amendment...................... 110 (j) Expenses......................................... 110 (k) Federal Bankruptcy Code.......................... 110 (l) U.S. Registration Number......................... 110 iii 121 Page (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial.................. 110 (n) Limitation on Recourse............................ 112 (o) Successor Trustee................................. 113 (p) Article 2-A of the UCC............................ 113 iv 122 ANNEXES Annex I - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Aircraft Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 3 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Assignment of Permitted Sublessee v EX-4.27 28 RESTATED AIRCRAFT LEASE AGREEMENT[GPA 1990 AWA-14] 1 EXHIBIT 4.27 THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1990 AWA-14] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, FLEET NATIONAL BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-14] DATED AS OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY FLEET NATIONAL BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF. AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1990 AWA-14] Dated as of September 21, 1990 Amended and Restated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as amended Lessor and AMERICA WEST AIRLINES, INC. Lessee One Airbus A320-231 Aircraft Manufacturer's Serial No. 092 U.S. Registration No. N635AW 2 AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of September 21, 1990 and amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). WITNESSETH: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as defined in the Pass Through Trust Agreement); and the term 3 "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or elect or cause the direction or election of the management and policies of a Person whether by contract or otherwise. "Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement d'interet economique formed under the laws of the French Republic, and its successors and assigns. "Aircraft" shall mean the Airframe leased hereunder and described in Lease Supplement No. 1 (or any airframe from time to time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any Engine substituted therefor hereunder) with respect to such Airframe, whether or not any such initial or substituted Engines may from time to time no longer be installed on the Airframe or may be installed on any other airframe, (ii) Parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Aircraft Records and Documents and all other logs, manuals and records with respect to such Aircraft, and (v) all substitutions, replacements and renewals of any and all thereof. "Aircraft Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft (except Engines or engines from time to time installed thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such model aircraft (except Engines or engines from time to time installed thereon) which may from time to time be substituted for such aircraft (except Engines or engines from time to time installed thereon) pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same shall be incorporated or installed on or attached to the Airframe, or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal - 2 - 4 from the Airframe; provided, however, that at such time as an aircraft (except Engines or engines from time to time installed thereon) shall be deemed part of the property leased hereunder in substitution for the Airframe pursuant to the applicable provisions hereof and the replacement Airframe shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), the replaced Airframe shall cease to be the Airframe hereunder. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that such Aircraft, Airframe, Engine or Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Aircraft as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section 18 in which case only Lessor shall select such appraiser (which appraiser does not have to be - 3 - 5 acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Aircraft shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to Section 4(a)(i). "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment - 4 - 6 due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 3. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Buyer Furnished Equipment" shall mean the equipment which was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar equipment furnished to Lessee. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder. - 5 - 7 "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. "Consent and Guaranty" shall mean the Amended and Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated as of December 30, 1988, in the form attached to the Purchase Agreement. "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean September 28, 1990, being the date the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) each of the two IAE Model V2500 engines listed by manufacturer's serial number in Lease Supplement No. 1 and initially installed on the Airframe covered by such Lease Supplement, whether or not from time to time thereafter no longer installed on the Airframe or installed on any other aircraft or airframe, and (ii) any replacement engine which may from time to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for any Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. The term "Engines" means, as of any date of determination, both Engines then leased hereunder. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. - 6 - 8 "Event of Loss" shall mean any of the following events with respect to the Aircraft, Airframe or either Engine: (a) loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days, but in no event later than the last day of the Term; (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any law, rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing on the last day of the Term; or (h) as otherwise provided - 7 - 9 herein. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe which is a part of such Aircraft. An Event of Loss with respect to an Engine shall not, absent an Event of Loss with respect to the Airframe, be deemed an Event of Loss with respect to the Airframe. "Excluded Property" shall have the meaning set forth in Section 9(b) hereto. "Expiration Date" shall mean the date specified in Lease Supplement No. 3, on which date the Basic Term of this Lease shall expire. "FAA" shall mean the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head Lessee to Lessor. "Federal Aviation Act" shall mean the sections of Title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass Through Trust Agreement and each supplement thereto and any certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise - 8 - 10 modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Aircraft by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its operations. "Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee (in its individual capacity and as trustee - 9 - 11 under the Pass Through Trusts), the Subordination Agent and each Liquidity Provider, and their respective successors and permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), and any combination thereof and their respective officers, directors, agents, servants, employees, subsidiaries, Affiliates and shareholders. "Indenture" shall mean the Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, and amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture computed on the basis of a 360-day year and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as - 10 - 12 originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1990 AWA-14] No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1990 AWA-14] No. 2 dated December 31, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 3" shall mean Lease Supplement [GPA 1990 AWA-14] No. 3, substantially in the form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Aircraft hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture - 11 - 13 Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Aircraft, the Airframe, any Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Aircraft, the Airframe, either Engine, the Trust Estate, the Operative Documents or the Financing Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20 (except Liens resulting from a transfer not permitted by such Section ) of this Lease or pursuant to Section 10 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being - 12 - 14 diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other maintenance program for the Aircraft which is approved by the aviation authority of the country of registry and complies with the requirements applicable to maintenance of the Aircraft contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Airframe, Engines, and components of the Aircraft, including, but not limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean, collectively, Manufacturer's Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be applicable in any given circumstance, together in each case with any subcontractor or supplier thereof. - 13 - 15 "Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French societe a responsabilite limitee, which as of the date hereof is owned by Airbus Industrie. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, any sublease, the Tax Indemnification Agreement, the Financing Documents, and any certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Aircraft Lease Agreement [GPA 1990 AWA-14], with respect to the Aircraft, dated as of September 21, 1990, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, and amended and restated as of the Restatement Date, between the Original Head Lessee and Owner Participant, as amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a Connecticut corporation. "Original Sublease" shall mean the Initial Sublease (as defined in the Original Head Lease) as in effect immediately prior to the Restatement Date. - 14 - 16 "Other Leases" shall mean the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, each as amended, supplemented or otherwise modified from time to time. "Other Letters of Credit" shall mean any and all letters of credit pursuant to Section 8(l) of the Other Leases. "Owner Participant" shall mean _____________ __________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Partial Assignment" shall mean the A320 Partial Assignment, Assumption, Release and Amendment Agreement, dated as of December 30, 1988, among Parent, Braniff, Inc., - 15 - 17 and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified. "Participation Agreement" shall mean the Participation Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named therein, as amended by the Letter Agreement dated as of July 29, 1993, as the same may be further amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (excluding complete Engines or engines), including Buyer Furnished Equipment, which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Airframe or any Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Airframe or Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or - 16 - 18 association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Amended and Restated Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as partially assigned to Parent pursuant to the Partial Assignment, to which Airbus Industrie, as guarantor, has consented, and as the same may from time to time be further amended, supplemented or otherwise modified to the extent permitted by the terms thereof. "Purchase Documents" shall mean the Purchase Agreement, the Partial Assignment and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Renewal Rent Payment Date shall be made on the next succeeding Business Day. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Airframe" and "Replacement Engine" shall have the meanings specified in accordance with their description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. - 17 - 19 "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. "Return Occasion" shall mean the event that occurs when possession of the Aircraft is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20 (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount - 18 - 20 and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Airframe or such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth, on Exhibit A hereto. "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of (a) an incipient Event of Loss and the operation of Section 11 hereof or (b) the need to correct any failure of the Aircraft to satisfy the requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this definition of "Supplemental Rent", as the case may be, not paid on the due - 19 - 21 date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Pro Rata Share" means as of any date of determination a fraction the numerator of which is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "equipment notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, and as amended and restated as of November 26, 1996, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Taxing Authority" shall have the meaning specified in Section 10(a). "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20, the Renewal Term, in either case as extended or deemed extended as a result of the occurrence of an event described in clause (iii) to the definition of "Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990 as amended by Trust Supplement No. 1, and as further amended by Trust Supplement No. 2, between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include each Trust Supplement. - 20 - 22 "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1 and Trust Supplement No. 2 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1990 AWA-14] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1990 AWA-14] No. 2 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Aircraft or the Airframe and Engine or engines installed thereon at that time to a third party pursuant to which such Aircraft or the Airframe and Engine or engines (i) shall be operated solely by regular employees of Lessee possessing all current certificates and licenses required under the Federal Aviation Act (it is understood that cabin attendants need not be regular employees of Lessee) and Lessee otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee in accordance with its normal maintenance practices and this Lease, and otherwise the insurance required hereunder shall be maintained and the Aircraft shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and subject to the conditions set forth in this Lease. - 21 - 23 Section 3. Delivery and Acceptance; Term. (a) Time of Delivery. The Aircraft was delivered to Lessee, and Lessee accepted delivery of the Aircraft, on September 28, 1990. (b) [Intentionally Left Blank.] (c) Acceptance of Aircraft. The Aircraft leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. Section 4. Rent. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in arrears as set forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable ten (10) Business Days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to the terms hereof shall survive the expiration or termination of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder. - 22 - 24 (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon, and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in the City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except for all Excepted Payments. All Excepted Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the - 23 - 25 date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft (subject to the provisions of Section 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any sublease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by - 24 - 26 applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED - 25 - 27 THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has, the - 26 - 28 right to lease the Aircraft hereunder and (y) on the Delivery Date the Aircraft was free of Head Lessor's Liens and on the Restatement Date the Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of this Lease and the delivery of the Aircraft and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Aircraft continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or airframe or propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect thereto under the Purchase Agreement (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Aircraft), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall - 27 - 29 immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or either of the Engines or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject any Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that no transfer of the registration of any Engine shall be effected in connection therewith; and provided, further, that (A) no such agreement or arrangement contemplates, results in or requires the transfer of title to any Engine, and (B) if Lessor's title to any Engine shall be divested under any such agreement or arrangement, such divestiture - 28 - 30 shall be deemed to be an Event of Loss with respect to such Engine and not an Event of Default and Lessee shall comply with Section 11(b) hereof in respect thereof; (2) deliver possession of the Aircraft, the Airframe or any Engine to the manufacturer thereof, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on such Aircraft, Airframe or Engine or any part thereof or for alterations or modifications in or additions to such Aircraft, Airframe or Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Aircraft or the Airframe to the United States of America or any instrumentality or agency thereof pursuant to a sublease; (4) (i) subject the Airframe to the Civil Reserve Air Fleet Program and transfer possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; or (ii) subject the Airframe to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install an Engine on an airframe (other than the Airframe) owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under - 29 - 31 normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or engines installed thereon; (6) install an Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that each Engine leased to Lessee hereby shall not become subject to the Lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of such Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the owner of such Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install an Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine and Lessee shall comply with Section 11(b) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in such Engine under applicable Law until compliance by Lessee with such Section 11(b); - 30 - 32 (8) enter into a Wet Lease for the Aircraft or the Airframe and engines installed thereon in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee shall enter into any Wet Lease for a period of more than six months (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given at least ten (10) Business Days prior to entering into such Wet Lease); or (9) sublease the Aircraft or the Airframe to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section 6(a) hereof (other than the transfer of an Engine which is deemed to have been an Event of Loss) and any Wet Lease shall be expressly subject and subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of the Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); - 31 - 33 (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable; (6) The sublessee under any Permitted Sublease, in its consent thereto, shall confirm that from and after the occurrence and continuance of an Event of Default and, unless an Event of Default specified in Section 17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease being deemed or declared in default, Lessor (and, so long as the Lien of the Indenture shall not have been discharged, Indenture Trustee) shall be entitled to enforce directly and in its own name all representations, warranties, indemnities, covenants and agreements under the applicable Permitted Sublease; and (7) Each Permitted Sublease shall (A) provide that (I) the Aircraft or Airframe may not be operated or used other than as provided in this Lease and shall be maintained and operated as required hereunder, (II) Lessor may avoid or terminate such sublease following an Event of Default hereunder and (III) to the extent not accomplished by an assignment of the Permitted Sublease, upon the occurrence of an Event of Default hereunder, Lessee's rights under such Permitted Sublease shall automatically be deemed assigned to Lessor; and (B) be a "net lease" in accordance with industry practice and shall be comparable to, or more restrictive than, this Lease and under such Permitted Sublease (except a sublease to the United States Government or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor under such Permitted Sublease, must be entitled to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted Sublease shall contain provisions regarding such Section 1110 which are substantially the same as the related provisions of this Lease. In addition, from and after the occurrence and continuance of an Event of Default, all rent and other amounts - 32 - 34 payable by the Permitted Sublessee under such Permitted Sublease shall be paid directly to Indenture Trustee and, upon discharge of the Lien of the Indenture, to Lessor. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Aircraft or the Airframe to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Aircraft in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Aircraft by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of - 33 - 35 the Aircraft in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Aircraft, to the registry of the Aircraft in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. Any Permitted Sublease shall expressly provide that the rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under the other Operative Documents or constitute a waiver of Lessor's rights or remedies hereunder or under the other Operative Documents, and such rights shall continue as if such Permitted Sublease had not occurred. Any Permitted Sublease shall expressly prohibit - 34 - 36 any further sub-sublease or assignment or any other similar transfer of the Aircraft, Airframe or any Engine or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease together with an assignment, as security for Lessee's obligations hereunder, of such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days following the effective date of such Permitted Sublease. (b) Reciprocal Recognition of Rights. In the event the lessor or secured party of any airframe leased to Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or other security agreement in accordance with Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement covering such airframe also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement, Lessor hereby agrees for the benefit of such lessor or secured party that Lessor will not acquire or claim, as against such lessor or secured party, any right, title or interest in any such engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease or conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. Lessor also hereby agrees for the benefit of the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as against such mortgagee, any right, title or interest in any engine subject to the lien of such mortgage as the result of such engine being installed on the Airframe at any time while such engine is subject to the lien of such mortgage. (c) Lawful Insured Operations. Lessee will not permit the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration - 35 - 37 issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, any manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the Aircraft is registered with the FAA, or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Aircraft or impair the interest of Lessor therein or impair the validity or priority of the Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Aircraft during the Basic Term or the then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Aircraft, or suffer or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance - 36 - 38 with good airline industry practice and in such manner to provide complete data and documentation necessary to substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, any other applicable rules, regulations and requirements by any other applicable Governmental Entity, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by Lessee without discrimination and as if Lessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by the central civil aviation authority of the country of registry, and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such condition as is necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times under the Federal Aviation Act and any other applicable law, or the applicable laws of any other jurisdiction in which the Aircraft may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance - 37 - 39 covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the Aircraft at all times, at its expense, to be duly registered during the Restricted Use Period and, subject to Section 11 of the Refunding Agreement, thereafter under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as (i) while the Aircraft is registered under the Federal Aviation Act, each of the Lessor or its successors or assigns is a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not register the Aircraft or permit the Aircraft to be registered under any Laws other than the Federal Aviation Act at any time except as provided in Section 11 of the Refunding Agreement and shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Aircraft and this Lease at all times. At any time after the Restricted Use Period, Lessor, upon compliance with all of the terms of Section 11 of the Refunding Agreement, shall, at the request and sole expense of Lessee, cooperate with Lessee to take all actions reasonably required to change the registration of the Aircraft to another country. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") in the cockpit of the Aircraft and on each Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a location reasonably adjacent to and not less prominent than the airworthiness certificate for the Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Aircraft or either Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Airframe and Engines to have placed thereon the customary colors and - 38 - 40 insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause any sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee on reasonable prior notice at reasonable times to visit, inspect and survey the Aircraft (including, without limitation, a visual "walk around" inspection which may include going on board the Aircraft, and inspecting the Aircraft during maintenance checks when panels and bays are open and subject to view), its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as no Default or Event of Default has occurred hereunder inspections shall be endeavored to be performed during regularly scheduled maintenance checks of the Aircraft. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Airframe or any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: - 39 - 41 (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Aircraft, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); - 40 - 42 (v) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vi) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Aircraft, either Engine or any Part with a repair or replacement cost (including labor charges) in excess of $1,000,000; (vii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (viii) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have - 41 - 43 been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Aircraft, the Airframe or either Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets (in one or a series of transactions) to any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the Laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, - 42 - 44 and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Aircraft as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its Federal and state income tax returns (or to permit the filing of the Federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Aircraft, the Airframe or the Engines. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Aircraft, Airframe or Engines only in commercial passenger operations and related cargo operations. Unless Owner Participant otherwise agrees, during the Restricted - 43 - 45 Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the Aircraft, Airframe or Engines to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Aircraft, Airframe or Engines for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft to be operated in any member state of the European Union or other European country, Lessee shall deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all aircraft (including, without limitation,the Aircraft) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this amended and restated Lease unless it had available to it the benefits of a lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Aircraft hereunder. The acknowledgement, covenant and agreement contained in this Section 8(i) shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by the Lessor, the Owner Participant and, if the Lien of the Indenture has not been discharged, the Indenture Trustee. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, - 44 - 46 filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Aircraft, the Airframe, any Engine or Part or the execution, delivery or performance of this Lease or the enforcement thereof against Lessee. (k) Security Opinion; Annual Certificate. (i) During such times that the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, rerecording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Lessor's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Aircraft is registered under any Laws other than the Federal Aviation - 45 - 47 Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (l) Letter of Credit. As security for the obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default has occurred, which amount may be applied, retained or utilized as provided in the penultimate paragraph of this Section 8(l). (ii) be maintained in full force and effect at all times until ninety-one (91) days after the Expiration Date with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that a Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited, will be acceptable to Lessor for so long as The Industrial - 46 - 48 Bank of Japan, Limited maintains a long term unsecured debt rating at least equal to its rating on the date hereof; (iii) be expressly designated as transferrable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term or the Lessor is holding proceeds of the Letter of Credit that were retained and not applied as provided herein, then Lessor shall return the Letter of Credit to Lessee or terminate it, and/or return any retained and unapplied proceeds, ninety-one (91) days following the date of such expiration or other termination of this Lease so long as no Default or Event of Default has occurred or is continuing hereunder or under any Other Lease, upon payment in full of all amounts then due and owing to Owner Trustee and Owner Participant under the Operative Documents. If an Event of Default has occurred or is continuing under this Lease or an Event of Default has occurred or is continuing under any Other Lease (as therein defined), in addition to any other rights and remedies Lessor may have hereunder, under any Other Lease, any sublease and any and all other remedies available at Law (including, without limitation, the Uniform Commercial Code as adopted in New York) or equity and upon exercising its rights under the Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to (i) hold any amounts drawn under the Letter of Credit or Other Letters of Credit as security for Lessee's obligations under this Lease or the Other Leases, (ii) retain any amounts drawn under the Letter of Credit or Other Letters of Credit for its own account and apply (including, without limitation, by way of set off against) such drawn amounts as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease and the Other Leases) to remedy any breach by Lessee of this Lease or any other Operative Documents or Other Leases or (iii) recompense Lessor, Owner Participant or any of their respective Affiliates for any loss, damage, cost or expense or other Claim due or owing hereunder or under the Other Leases; provided, however, that in the case of any drawing in respect of any claim for payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts which would (absent such Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders); provided further, however, that neither the amount so applied at any one time nor the aggregate amount - 47 - 49 so applied at different times shall reduce the amount of any installment or payment of Rent (whether upon the termination of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in full the amounts required to be paid on account of the principal of and any interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or credit with respect to any amounts so applied. Any amount retained shall be considered the property of Lessor and Lessor may commingle such amount with its general funds and Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum extent permitted by applicable Law, any interest therein. Lessee shall not be entitled to any interest or other earnings on such retained amount and such amount shall not be refundable. On application of all or any portion of the amounts drawn under the Letter of Credit or any Other Letters of Credit in accordance with this Section 8(l) or the Other Leases, Lessee shall on demand reinstate the amount of the Letter of Credit or Other Letters of Credit, as the case may be, to its or their full Face Amount or provide to Lessor one or more additional Letters of Credit meeting the requirements of this Section 8(l), so that the Letter of Credit and each of the Other Letters of Credit at all times equals the original Face Amount provided for herein. During such times as Lessor shall elect to hold all or part of the proceeds of the Letter of Credit or Other Letters of Credit as security for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee shall not be obligated to reinstate the amount of the Letter of Credit or Letters of Credit, as the case may be, in respect of the proceeds so held. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace - 48 - 50 at its own cost and expense such Parts as promptly as possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). All Parts which are at any time removed from the Aircraft shall remain the property of Lessor, subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Aircraft and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Aircraft as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine to the extent made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Airframe, Engines or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) - 49 - 51 may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Airframe, either Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Airframe, Engines and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Aircraft as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Aircraft on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Aircraft without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Aircraft would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Aircraft (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) - 50 - 52 subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Aircraft, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Aircraft in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Aircraft as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Aircraft. Notwithstanding any other provision hereof, and without limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted Sublessee) may install in the Aircraft audio visual, entertainment or telephonic equipment (including seats with such equipment installed therein) (any or all of which are hereafter referred to as - 51 - 53 "Excluded Property") in the ordinary course of business, and Lessor shall not claim or acquire title thereto and the rights of the owners thereof therein shall not constitute a default hereunder; provided that (i) any such Excluded Property shall be removed prior to the date of a Return Occasion without causing any damage to the Aircraft and without diminishing or impairing the value, utility, remaining useful life or condition which the Aircraft would have had at such time had such Excluded Property not been installed, (ii) any equipment or seats which such Excluded Property replaces shall be properly stored with the interests of Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee or warehouse, and properly reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are required as a result of such removal and/or reinstallation. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Aircraft, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Airframe or either Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided the Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit - 52 - 54 of and transferring title to Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee provided that in any circumstance in which the Lessor is required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has - 53 - 55 occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or otherwise, with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, by any federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) the Aircraft, the Airframe, any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re- registration, deregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the - 54 - 56 Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any modification or reissuance, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, Taxes imposed on, based on, or measured by, the gross or net income of such Indemnitee or Taxes in lieu thereof (including minimum taxes, withholding taxes and taxes on or measured by any item of tax preference) imposed by the federal government of the United States of America (other than taxes in the nature of sales or use taxes, license taxes, or property taxes), (ii) In the case of any Indemnitee, Taxes imposed on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any state, local or foreign government or taxing authority (other than Taxes in the nature of sales Taxes, use Taxes, license Taxes or property Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), - 55 - 57 (iii) In the case of any Indemnitee, Taxes which arise out of or are caused by any gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee or any sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (A) an Event of Default and the exercise by any Indemnitee of its remedies under this Lease or the Indenture, as the case may be or (B) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms hereof; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed on a transferee of such Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any Part or any interest in the Operative Documents to the extent the amount of any such Taxes exceeds the amount of such Taxes that would have been imposed had there not been any such transfer, unless such transfer results from action by or on behalf of such Indemnitee taken in connection with any Event of Default that has occurred and is continuing or upon the request of the Lessee, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this Section 10(b) or to a failure by Lessee to satisfy its obligations related to such return, (vii) With respect to an Indemnitee other than the Indenture Trustee or the Trust Indenture - 56 - 58 Estate, Taxes which arise out of or are caused by (i) any act or omission or material misrepresentation of any Indemnitee where such act or omission is not permitted by the Financing Documents or the Operative Documents, or (ii) a failure by an Indemnitee to fulfill its contest obligations, and, in the case of the Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a result of a breach of such Indemnitee's representations, warranties, or covenants contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any material respect, or from a failure by such Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Aircraft, or (ix) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust, or (x) In the case of the Indenture Trustee, each Pass- Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) in the case of an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (other than taxes which are in the nature of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee (A) by any state or local Taxing Authority other than Taxes imposed by any such state or local jurisdiction in which the Indemnitee has its principal place of business or is subject to such Tax as a result of business transactions or other presence unrelated to the transactions contemplated by the Financing - 57 - 59 Documents or the Operative Documents, unless such Taxes are imposed by such jurisdiction solely as a result of (x) the operation of the Aircraft in such jurisdiction or (y) the transactions contemplated by the Operative Documents, to the extent such taxes are directly attributable to such operation of the Aircraft or to such transactions, and (B) by any foreign jurisdiction which are imposed as a result of Lessee's or sublessee's activities in such foreign jurisdiction in connection with the transactions contemplated by the Financing Documents or the Operative Documents, provided, however, a Covered Income Tax also includes the incremental amount of franchise taxes, taxes on doing business, capital stock taxes or taxes on, based on or measured by gross or net income of the original Owner Participant attributable to the Lease (excluding, however, any taxes that would be excluded under any provision other than clauses (i) and (ii) of subsection (b) of this Section 10) which are imposed by the "Home State" of a sublessee (the Home State of a sublessee being the jurisdiction in which such sublessee maintains its principal operations and maintenance center), or in the absence of a Permitted Sublessee, the jurisdiction where the Aircraft is stored, but only to the extent such incremental taxes result from activities of Lessee or Permitted Sublessee under the Lease in or with respect to the Home State or the jurisdiction where the Aircraft is stored, and taking into account in calculating such incremental taxes all state tax benefits and savings in the Home State resulting from activities of Lessee or Permitted Sublessee under the Lease, disregarding for such purpose any actual or constructive changes in ownership of the original Owner Participant, provided, however, that Owner Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's liability for indemnity payments attributable to taxes incurred in sublessee's Home State with respect to each Permitted Sublessee; and (ii) in the case of the Indenture Trustee or the Trust Indenture Estate, any Tax based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (including minimum taxes, withholding taxes, and taxes on or measured by any item of tax preference) imposed on such Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or possession of the United States, other than any such Tax which would not have been imposed in the absence of -58- 60 such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to the Owner Participant or Owner Trustee or will notify the Owner Participant or Owner Trustee of such requirement and make such report or return in such manner as shall be reasonably satisfactory to Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of Taxes imposed on the Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest federal corporate income tax rate applicable to Owner - 59 - 61 Participant in the year of payment and the highest corporate income tax rate in the jurisdiction in which Owner Participant files a consolidated state income tax return (currently Virginia). (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (ii) the reduction calculated on the same basis as the gross up in Section 10(e) hereof in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (i) above would exceed (A) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (B) the portion of all prior payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are - 60 - 62 the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. In the event that an Indemnitee receives a written notice of a claim which, if sustained, would require the payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's sole expense, in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in whole or in part separately in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, the Lessee shall not be permitted to contest in the name of such Indemnitee if such contest involves Taxes imposed against such Indemnitee that are unrelated to the transactions contemplated by the Financing Documents or the Operative Documents or Taxes based on or measured by the gross or net income of the Indemnitee, and provided, that if the Indemnitee determines in good faith that there is a material possibility of a material adverse impact upon the Indemnitee with respect to such contest, such Indemnitee may retain or reassert control of any contest that Lessee would otherwise be permitted to contest; provided, further, that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) Lessee shall have (a) furnished Indemnitee with a written opinion of tax counsel - 61 - 63 selected by Indemnitee and reasonably acceptable to Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352) exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), provided however, that in the event the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of tax counsel, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which the Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of statutory changes-in-law, it is as likely as not that the position will prevail, and (b) agreed to pay Indemnitee for all reasonable costs and expenses which Indemnitee may incur in contesting such claim (including without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayment of estimated taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interests), (ii) a threshold amount of $50,000 for any individual claim is at issue, (iii) there is no substantial risk or danger of the sale, loss or forfeiture of the Aircraft, (iv) Lessee shall have admitted its liability to indemnify Owner Participant for such claim or set forth in writing why it is not so liable, (v) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, the Lessee shall have advanced to such Indemnitee sufficient funds (on an interest free basis) to make such payments, (vi) no claim shall be appealed to the U.S. Supreme Court, (vii) no appeal of a trial court decision shall be undertaken unless Lessee at its sole cost and expense shall have furnished Indemnitee with a written - 62 - 64 opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that Indemnitee is more likely than not to prevail in such appeal, and (viii) no Event of Default has occurred and is continuing. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released from its responsibility to contest such claim or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a - 63 - 65 consolidated Federal income tax return, the term "Indemnitee" shall mean and include any member of such affiliated group. (l) Verification. At Lessee's request, the amount of any indemnity payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified by an independent public accounting firm selected by such Indemnitee and reasonably satisfactory to Lessee. In order to enable such accountants to verify the indemnity amount, such Indemnitee shall provide to the accountants (for their own confidential use) information reasonably necessary for such verification to which Lessor has access; provided, however, such information shall not be disclosed to Lessee or any person other than such accountants. The fee of such firm shall be payable by Lessee unless such verification shall result in an adjustment in Lessee's favor exceeding 10% of the amount of the indemnity payment. (m) Survival. All of the obligations and rights of Lessee and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the Engines or any Part thereof shall survive the assignment, or expiration or other termination, of the Lease with respect to the Aircraft for a period of six (6) years from the occurrence of such assignment, or expiration or termination, except that such obligations shall survive the expiration of such six (6) year period with respect to any claim asserted prior to the expiration of such six (6) year period but in either case only to the extent such obligation or claim relates to events which occurred or conditions which existed during the Term. Such obligations are expressly undertaken by Lessee for the benefit of, and shall be enforceable by, Lessor. The provisions of this Section 10(m) are subject to the exclusions of Section 10(b)(viii). Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Airframe. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Airframe or the Airframe and any Engines then installed thereon, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty - 64 - 66 (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Airframe and such Engines then installed thereon, title to a replacement Airframe (together with the same number of replacement Engines as the Engines), such replacement Airframe and Engines (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe and replacement Engines may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and to be in at least as good operating condition as, the Airframe and the Engines, if any, so replaced (assuming the Airframe and the Engines were maintained in accordance with the requirements of this Agreement, whether or not they are in fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988 and, in the case of Engines, in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and the Engines suffering the Event of Loss as well as all of Lessor's right, title and interest in and to any Engine constituting part of the Aircraft and replaced as provided - 65 - 67 above but not installed thereon at the time of the Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed part of the property leased hereunder and shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in replacement of the Airframe or Engines under this Section 11(a)(i) shall result in any reduction of Rent. (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss (or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last day of the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, in effect on the last day of the Term, for each day from and including the last day of the Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and Engines suffering the Event of Loss, as well as all of Lessor's right, title and interest, if any, in and to any Engine constituting part of the Aircraft but not installed thereon at the time of the Event of Loss. - 66 - 68 (b) Event of Loss with Respect to an Engine. Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine and is suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, free of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens), and is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease - 67 - 69 Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein and shall be deemed part of the same Aircraft as was the Engine replaced thereof. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Conveyance of Replacement Airframe. Prior to or at the time of any conveyance of a replacement Airframe pursuant to Section 11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the following documents - 68 - 70 which shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect on said date: (i) a full warranty bill of sale, in form and substance satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be approved by the FAA on said date), executed by the owner thereof, in favor of Lessor and, cause supplements, reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), to this Lease, the Indenture (if then in effect) and the Trust Agreement (if then in effect), with respect to such replacement Airframe and to be duly filed for recordation pursuant to the Federal Aviation Act or other applicable Governmental Entity; (ii) the certificate specified in Section 12(f) hereof demonstrating compliance with the insurance requirements of Section 12 with respect to the replacement Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such other evidence of title as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request) to the effect that, upon such conveyance, Lessor will acquire good title to such replacement Airframe free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe may be subject to Permitted Liens), that such replacement Airframe will be leased hereunder to the same extent as the Airframe replaced thereby and will be subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and Replacement Engine and the Lien of the Indenture on such Replacement Airframe and Replacement Engine; and that Lessor, and Indenture Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement airframe and engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement; (iv) a certificate signed by a Responsible Officer of Lessee certifying that, upon - 69 - 71 consummation of such replacement, no Default or Event of Default will exist hereunder; (v) such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(c), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(c), in each case in form and substance satisfactory to each such party, including evidence that the Aircraft of which the replacement Airframe is a part has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of this Lease and application for registration of such replacement Airframe in the name of Lessor has been duly made with the FAA or other applicable Governmental Entity and Lessee has temporary or permanent authority to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code financing statements covering the replacement Airframe as may be reasonably requested by Lessor or Indenture Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal prepared in accordance with the Appraisal Procedure which confirms that the replacement Airframe and any replacement Engine has a value, utility and remaining useful life at least equal to that of the Airframe and Engines which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of this Lease whether or not they are in fact so maintained; and (ix) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe is free and clear of Lessor's Liens), all of Lessor's right, title and interest in and to the Aircraft which suffered the Event of Loss. No Event of Loss with respect to the Aircraft under the circumstances contemplated by the terms of this Section 11(c) shall result in any reduction in Rent. For all purposes of this Lease, each such replacement Aircraft (together with any Engines constituting part of the Aircraft being replaced as to which an Event of Loss has not occurred) shall be deemed part of the property - 70 - 72 leased hereunder and shall be deemed the "Aircraft" as defined herein. (d) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer (including a Governmental Entity providing an indemnity in lieu thereof) with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other than insurance or such indemnity proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and other payments, if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (e) Requisition for Use by Government with Respect to the Aircraft. Subject to Section 11(f) below, in the event of the requisition for use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other than a requisition constituting an Event of Loss), Lessee shall promptly notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) thereof and all of Lessee's obligations under this Lease with respect to such Airframe or Engine shall continue to the same extent as - 71 - 73 if such requisition had not occurred. All payments received by Lessor or Lessee from the Governmental Entity for the use of such Airframe or Engine during the Term shall be paid over to, or retained by, Lessee if no Default or Event of Default shall have occurred and be continuing; and all other payments received by Lessor or Lessee from the Governmental Entity shall be paid over to, or retained by, Lessor. If the Airframe and such Engines or engines are not returned by the end of the Term, an Event of Loss shall be deemed to have occurred on the last day of the Term and, on the last day of the Term, Lessee shall either pay to Lessor the amount provided herein for an Event of Loss to the Airframe and such Engines or engines on such date or provide a replacement Aircraft and Engine on such date in the condition provided for in Section 16 and Exhibit E. In the event of the requisition for use by the Governmental Entity of any Engine without the requisition for use of the Airframe, Lessee will replace such Engine hereunder by complying with the terms of Section 11(b) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (f) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. - 72 - 74 Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability products, completed operation liability covering maintenance of aircraft, but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Aircraft, in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured or additional insured by any act or omission of Lessee or any other insured or additional insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured or additional insured of any breach or violation by Lessee or any other insured or additional insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time - 73 - 75 as is the insurance industry standard for war/allied perils coverage), after notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft is located or operated, and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, or the other Indemnitees, or their respective permitted assigns, with respect to the Aircraft. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the consent of Lessee) covering the Aircraft, and "all-risk" coverage including transit insurance with respect to Engines and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily - 74 - 76 maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull insurance reasonably acceptable to Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly-sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged; provided that Indenture Trustee shall not be obligated to request such insurance and shall not be liable for any failure to request such insurance. Anything herein to the contrary notwithstanding, at all times while the Aircraft is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Aircraft. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Aircraft, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall - 75 - 77 expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Aircraft, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee, as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). - 76 - 78 Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and any other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, - 77 - 79 the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have - 78 - 80 occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Aircraft and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Aircraft complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris if the relevant primary insurer shall have obtained reinsurance and such reinsurance (i) is - 79 - 81 on the same terms as the original insurance and includes the provisions required by this Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contains a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for passenger aircraft of similar size as the Aircraft in similar storage or grounding. - 80 - 82 (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims (whether or not based on strict liability), damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, costs and expenses set forth in Section 21(j) hereof and reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee, from (and including) the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, including, but not limited to, (A) the - 81 - 83 importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Aircraft to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations thereunder or to file the documentation necessary to continue FAA registration of the Aircraft), delivery, nondelivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such defect shall be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, - 82 - 84 any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder or thereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in - 83 - 85 this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, either in the air or on the ground, or which may be caused by any defect in such Aircraft, Airframe, Engine, engine or Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of the location of such Aircraft at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively - 84 - 86 provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents (except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition), (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents, or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by - 85 - 87 Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee has the right to control the defense thereof is materially prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section. Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Aircraft or of the residual value of the Aircraft. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease or any of the other Operative Documents and are expressly made for the benefit of and shall be enforceable by each Indemnitee. - 86 - 88 Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in - 87 - 89 clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor, cause any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease, and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the - 88 - 90 Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Aircraft or Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Section 16. Return of Aircraft and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Aircraft to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree, fully equipped with - 89 - 91 all required Engines, or other engines owned by Lessee (which shall thereupon become Engines as hereinafter provided) meeting the conditions specified in this Section and Exhibit E, duly installed thereon by delivering the same to the Lessor at such location. Lessee shall comply with Section 11(b) and this Section 16 with respect to any engines installed on the Aircraft returned to Lessor hereunder and meeting the conditions described herein which were not originally installed on the Aircraft. (b) Status Upon Return. Upon any Return Occasion hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act and with a current and valid Airworthiness Certificate installed on the Aircraft, unless such certificate shall have been suspended or revoked as a result of the suspension or revocation of the registration of the Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft to be registered in the name of Lessor under the Federal Aviation Act (whether by means of a voting trust agreement or otherwise) in which case the Aircraft shall nevertheless meet all conditions for such certification and for the issuance of such certificate; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Aircraft to be operated under, and in full compliance with, such Airworthiness Certificate and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense with respect to effecting such registration, duly registered in the name of the Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vii) in - 90 - 92 good and airworthy operating condition, and in the same condition (including, without limitation, in a passenger configuration suitable for passenger revenue service) as when delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (viii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Engines. In the event any engine not owned by Lessor shall be installed on the Aircraft on any Return Occasion, without limiting Lessee's obligations under the Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engines or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engines, assuming the Engines were in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens. (d) Records and Documents. Upon the return of the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Aircraft, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Aircraft and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Aircraft - 91 - 93 under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Aircraft under the Maintenance Program, in each case as Lessor may reasonably request, and all documentation with respect to the Aircraft set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Aircraft on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Aircraft, Airframe, Engines, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an aircraft which has been operating in regulated commercial air service, shall be delivered to Lessor with the Aircraft. Any documents or records required to be delivered hereunder shall be in English. - 92 - 94 (e) Condition of Aircraft. Upon any Return Occasion, Lessee shall return such Aircraft to Lessor in such condition that the Aircraft shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Aircraft available to Lessor at the location where the "block 'C' Check" (or equivalent level designated check or checks) required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding compensation to representatives of Lessor), in order to verify that the condition of such Aircraft complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such "block 'C' Check" (or equivalent level check or checks) and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such "block 'C' Check" is being performed and shall have such duration as to permit the opening of any areas of the Aircraft which are necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Aircraft and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to the Aircraft undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations hereunder continued, on a daily basis until the Final Inspection shall have been concluded and Lessee shall pay Rent during any such extension in an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value during such extension shall equal the Stipulated Loss Value on the last day of the Basic Term or Renewal Term, as the case may be); provided, however, that Lessee shall not be required to pay Rent with respect to the Aircraft during the period of extension to the extent that Lessor is responsible for the delay in - 93 - 95 completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Aircraft Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Aircraft. (h) Corrections and Subsequent Corrections. To the extent that the Aircraft or any Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as such Aircraft is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of such Aircraft and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of such Aircraft, at commercial rates then charged by the Person selected by Lessor to perform such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. Nothing set forth in this paragraph shall constitute a limitation on Lessor's or Owner Participant's ability to recover from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the return of the Aircraft at the time, in the place and in the condition as specified in this Section 16 and Exhibit E hereto. (i) Functional Flight Check. Immediately prior to the expiration of the Term, Lessor will be permitted to conduct a non-commercial functional flight check flight of no more than two (2) hours duration in accordance with the - 94 - 96 Manufacturer's functional flight check procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft and proper functioning of all systems and components. A qualified pilot and up to five (5) other representatives selected by Lessor may take part in such flight to verify compliance of the Aircraft with the requirements of this Lease, provided, that Lessor shall be responsible for the charges of such qualified pilot and representatives. Lessee may combine the functional flight check provided in this Section 16(i) with the delivery flight specified in Section 16(a) and such functional flight check shall include the landing. Any discrepancy or malfunction detected during any functional flight check (including a functional flight check combined with a delivery flight) shall be corrected, at Lessee's expense, and prior to the expiration of the Term. To the extent that any actions to correct any such discrepancy or malfunction extend beyond the Term, the provisions of the first sentence of Section 16(h) shall apply. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee. (j) Export Certificate of Airworthiness. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably request to assist Lessor in obtaining any required documents in relation to the export of the Aircraft from the United States (including, without limitation, a valid and subsisting export certificate of airworthiness with respect to the Aircraft and export license) and in relation to the deregistration of the Aircraft. (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Aircraft which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Aircraft for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be - 95 - 97 paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Aircraft after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Aircraft and the records relating thereto to the extent it does not unreasonably interfere with the operation or maintenance of the Aircraft or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the date on which such payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto; provided that any failure of Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless Lessor or Owner Participant delivers notice to Lessee; or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Aircraft outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Aircraft; or (c) Any representation or warranty made by Lessee herein or in the Refunding Agreement or in any certificate furnished by Lessee in connection herewith or therewith is or was incorrect at the time made in any material respect - 96 - 98 and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or the Refunding Agreement, and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c) or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's - 97 - 99 consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within ninety (90) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of ninety (90) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or - 98 - 100 more of the following with respect to all or any part of the Airframe and any or all of the Engines as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's cost and expense, immediately return, and the Lessee hereby agrees that it shall return promptly all or such part of, the Aircraft to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Aircraft) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Aircraft or any Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if such Aircraft were being returned at the end of the Term hereof with respect to such Aircraft. In addition, Lessor or Lessor's agent, at its option and to the extent permitted by applicable Law, may but shall not be obligated to enter upon the premises where all or any part of the Aircraft, Airframe and/or Engines are located to take immediate possession of and, at Lessor's option, remove the same (and/or any engine which is not an Engine but which is installed on the Airframe, subject to the rights of the owner, lessor or secured party thereof) by summary proceedings or otherwise, all without liability accruing to Lessor or Lessor's agent for or by reason of such entry or taking of possession or removal whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. (b) With or without taking possession thereof, sell or cause to be sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. - 99 - 101 (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Aircraft to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Aircraft for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, Airframe or Engine or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent due to and including the date of sale, plus the amount by which the Stipulated Loss Value of such Aircraft, Airframe or Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In lieu of exercising its rights under paragraph (b), (c) or (d) above, by notice to Lessee, Lessor - 100 - 102 may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in advance for the period on and after the Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such Aircraft due and unpaid for any period prior to and including, and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss Value for the Aircraft computed as of such Stipulated Loss Value Date; and upon such payment of liquidated damages and the payment of all other Rent then due hereunder and the discharge of the Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without recourse or warranty (except as to the absence of Lessor's Liens and the Lien of the Indenture), all right, title and interest of Lessor in and to the Aircraft to Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and deliver such documents evidencing such transfer and take such further action as Lessee shall reasonably request. (f) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the Aircraft, Airframe or Engine under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, Airframe or Engine, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Aircraft which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for such Aircraft, Airframe or Engine would have expired but for Lessee's default, discounted periodically (equal to installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (g) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, - 101 - 103 whereupon Lessee's right to possess and use the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. (h) Lessor may exercise any other right or remedy which may be available to it under applicable laws, or may proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above, until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Aircraft, Airframe or Engine in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any - 102 - 104 personal property of Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's property in repossessing and holding the Aircraft, the Airframe, an Engine or Part except for direct damages caused by Lessor's gross negligence or willful misconduct and (iv) shall have the right to maintain possession of and dispose of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Aircraft, the Airframe, an Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Aircraft, the Airframe, an Engine or Part pursuant to this Section, Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor shall be used in the - 103 - 105 computations contemplated herein and Lessee shall remain liable for any deficiency. No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d), (e) or (f) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Aircraft leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Aircraft, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. The provisions of this Section 18 shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. Section 19. Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and perfected security interest in - 104 - 106 all of Lessor's right, title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee hereby consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) (other than Expected Rights) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. Section 20. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): - 105 - 107 (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Aircraft for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, in no event less than the greater of 120% of the "fair market sales value" of the Aircraft as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or - 106 - 108 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. To the extent permitted by Law, each of Lessor and Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft or any Engine or Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Aircraft for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices and instructions between Lessor and Lessee required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). All notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee (until such time as the Lien of the Indenture is discharged) and to Owner Participant, at such address as Owner Participant and Indenture Trustee, respectively, may - 107 - 109 designate from time to time. All notices and instructions hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft hereunder, and all rents, revenues, profits and income therefrom, in accordance with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it, provided that Lessor and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, Note Holder or any other Person lawfully claiming by or through them, and provided further, that the - 108 - 110 foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay - 109 - 111 or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications hereof or thereof, or waivers or consents hereunder or thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the Financing Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft similarly situated to Lessor. (l) U.S. Registration Number. At Lessee's request, Lessor shall use its best efforts to have the Aircraft registered under the United States Registration Number designated by Lessee. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United States District Court for the Southern District of New York. Each of Lessee and Lessor represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee or Lessor hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, it hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a - 110 - 112 defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Each of Lessee and Lessor hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee or Lessor as from time to time may be designated by Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns (as applicable). Final (after all appeals) judgment (the enforcement of which has not been stayed) against either Lessee or Lessor obtained in any suit originally brought in the court of the State of New York in New York County or in the United States District of New York shall be conclusive, and, to the extent permitted by applicable Law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings, against Lessee or Lessor, as the case may be, or any of their assets in the courts of any country or place where such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS - 111 - 113 IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all purposes hereof without the necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. - 112 - 114 (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease, as amended and restated by this Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] (and as otherwise extended, amended, modified, renewed or supplemented), shall be governed by Article 2-A of the Uniform Commercial Code of New York. - 113 - 115 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by its duly authorized officer as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:__________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:___________________________ Title: - 114 - 116 TABLE OF CONTENTS
Page ---- Section 1. Definitions ................................................ 1 Section 2. Agreement to Lease ......................................... 21 Section 3. Delivery and Acceptance; Term .............................. 22 (a) Time of Delivery .......................................... 22 (b) [Intentionally Left Blank.] ............................... 22 (c) Acceptance of Aircraft .................................... 22 (d) Term of Lease ............................................. 22 Section 4. Rent ....................................................... 22 (a) Rent ...................................................... 22 (b) Minimum Payments .......................................... 23 (c) Date, Place and Method of Payment ......................... 23 (d) Prohibition Against Setoff, Counterclaim, Etc ....................................................... 24 Section 5. Representations, Warranties and Covenants .................. 25 (a) Warranties and Disclaimer of Warranties ................... 25 (b) Representations and Warranties of Lessor .................. 27 (c) No Amendments to Financing Documents ...................... 27 (d) Suppliers' Warranties ..................................... 27 Section 6. Possession and Use ......................................... 28 (a) Possession ................................................ 28 (b) Reciprocal Recognition of Rights .......................... 35 (c) Lawful Insured Operations ................................. 35 (d) Maintenance ............................................... 36 (e) Registration and Insignia ................................. 38 Section 7. Inspection ................................................. 39 Section 8. Additional Covenants of Lessee ............................. 39 (a) Financial Information ..................................... 39 (b) Maintenance of Corporate Existence ........................ 41 (c) Maintenance of Status ..................................... 41 (d) Payment of Taxes .......................................... 41 (e) Consolidation, Merger, Etc ................................ 42 (f) Information ............................................... 43 (g) Place of Business ......................................... 43 (h) Certain Limitations on Use ................................ 43 (i) Section 1110 .............................................. 44 (j) Permits and Licenses ...................................... 44 (k) Security Opinion; Annual Certificate ...................... 45 (l) Letter of Credit .......................................... 46
i 117
Page ---- Section 9. Replacement of Parts; Alterations, Modifications and Additions .................................... 48 (a) Replacement of Parts ..................................... 48 (b) Alterations, Modifications and Additions ................. 49 (c) Pooling .................................................. 52 Section 10. General Tax Indemnity ..................................... 53 (a) ......................................................... 53 (b) Exclusions .............................................. 55 (c) Covered Income Tax ...................................... 57 (d) Reports and Returns ..................................... 59 (e) After-Tax Basis ......................................... 59 (f) Tax Benefit ............................................. 60 (g) Payment ................................................. 60 (h) Contest ................................................. 61 (i) Refund .................................................. 63 (j) Diligence ............................................... 63 (k) Affiliated Group ........................................ 63 (l) Verification ............................................ 64 (m) Survival ................................................ 64 Section 11. Loss, Damage and Requisition .............................. 64 (a) Event of Loss with Respect to the Airframe .............. 64 (b) Event of Loss with Respect to an Engine ................. 67 (c) Conveyance of Replacement Airframe ...................... 68 (d) Application of Proceeds and Payments .................... 71 (e) Requisition for Use by Government with Respect to the Aircraft ................................. 71 (f) Application in Default .................................. 72 Section 12. Insurance ................................................. 73 (a) Public Liability and Property Damage Insurance ............................................... 73 (b) Insurance Against Loss or Damage ........................ 74 (c) Application of Insurance Proceeds for an Event of Loss ........................................... 77 (d) Application of Insurance Proceeds for Other than an Event of Loss ................................... 78 (e) Application in Default .................................. 78 (f) Certificates ............................................ 79 (g) Reinsurance ............................................. 79 (h) Storage ................................................. 80 (i) Amounts Held ............................................ 81 (j) After the Term .......................................... 81 (k) Governmental Indemnity .................................. 81 Section 13. General Indemnity ......................................... 81
ii 118 Section 14. Liens .................................................... 87 Section 15. Protection of Title and Further Assurances ............... 88 Section 16. Return of Aircraft and Records ........................... 89 (a) Return ................................................... 89 (b) Status Upon Return ....................................... 90 (c) Engines .................................................. 91 (d) Records and Documents .................................... 91 (e) Condition of Aircraft .................................... 93 (f) Final Inspection ......................................... 93 (g) Aircraft Records and Documents ........................... 94 (h) Corrections and Subsequent Corrections ................... 94 (i) Functional Flight Check .................................. 94 (j) Export Certificate of Airworthiness ...................... 95 (k) Service Bulletin and Modification Kits ................... 95 (l) Storage Upon Return ...................................... 95 (m) Resale/Release Cooperation ............................... 96 Section 17. Events of Default ........................................ 96 Section 18. Remedies ................................................. 98 Section 19. Security for Obligations ................................. 104 Section 20. Renewal Option ........................................... 105 Section 21. Miscellaneous ............................................ 106 (a) Severability, Amendment, and Construction ................ 106 (b) GOVERNING LAW ............................................ 107 (c) Notices .................................................. 107 (d) Lessor's Right to Perform for Lessee ..................... 108 (e) Counterparts ............................................. 108 (f) Quiet Enjoyment .......................................... 108 (g) Brokers .................................................. 109 (h) Investment of Funds ...................................... 109 (i) Entire Agreement; Amendment .............................. 109 (j) Expenses ................................................. 109 (k) Federal Bankruptcy Code .................................. 110 (l) U.S. Registration Number ................................. 110 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial ..................................... 110 (n) Limitation on Recourse ................................... 112 (o) Successor Trustee ........................................ 112 (p) Article 2-A of the UCC ................................... 113
iii 119 ANNEXES Annex I - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Aircraft Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 3 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Assignment of Permitted Sublessee iv EX-4.28 29 RESTATED AIRCRAFT LEASE AGREEMENT[GPA 1990 AWA-15] 1 EXHIBIT 4.28 THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1990 AWA-15] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, FLEET NATIONAL BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-15] DATED AS OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY FLEET NATIONAL BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF. - ------------------------------------------------------------------------------- AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1990 AWA-15] Dated as of September 21, 1990 Amended and Restated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as amended Lessor and AMERICA WEST AIRLINES, INC. Lessee One Airbus A320-231 Aircraft Manufacturer's Serial No. 098 U.S. Registration No. N636AW - ------------------------------------------------------------------------------- 2 AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of September 21, 1990 and amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as defined in the Pass Through Trust Agreement); and the term 3 "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or elect or cause the direction or election of the management and policies of a Person whether by contract or otherwise. "Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement d'interet economique formed under the laws of the French Republic, and its successors and assigns. "Aircraft" shall mean the Airframe leased hereunder and described in Lease Supplement No. 1 (or any airframe from time to time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any Engine substituted therefor hereunder) with respect to such Airframe, whether or not any such initial or substituted Engines may from time to time no longer be installed on the Airframe or may be installed on any other airframe, (ii) Parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Aircraft Records and Documents and all other logs, manuals and records with respect to such Aircraft, and (v) all substitutions, replacements and renewals of any and all thereof. "Aircraft Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft (except Engines or engines from time to time installed thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such model aircraft (except Engines or engines from time to time installed thereon) which may from time to time be substituted for such aircraft (except Engines or engines from time to time installed thereon) pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same shall be incorporated or installed on or attached to the Airframe, or so long as title thereto shall remain vested in Lessor in -2- 4 accordance with the terms of Section 9 hereof after removal from the Airframe; provided, however, that at such time as an aircraft (except Engines or engines from time to time installed thereon) shall be deemed part of the property leased hereunder in substitution for the Airframe pursuant to the applicable provisions hereof and the replacement Airframe shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), the replaced Airframe shall cease to be the Airframe hereunder. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that such Aircraft, Airframe, Engine or Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Aircraft as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal -3- 5 pursuant to Section 18 in which case only Lessor shall select such appraiser (which appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Aircraft shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to Section 4(a)(i). -4- 6 "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 3. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Buyer Furnished Equipment" shall mean the equipment which was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar equipment furnished to Lessee. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. -5- 7 "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. "Consent and Guaranty" shall mean the Amended and Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated as of December 30, 1988, in the form attached to the Purchase Agreement. "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean September 28, 1990, being the date the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) each of the two IAE Model V2500 engines listed by manufacturer's serial number in Lease Supplement No. 1 and initially installed on the Airframe covered by such Lease Supplement, whether or not from time to time thereafter no longer installed on the Airframe or installed on any other aircraft or airframe, and (ii) any replacement engine which may from time to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for any Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. The term "Engines" -6- 8 means, as of any date of determination, both Engines then leased hereunder. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Aircraft, Airframe or either Engine: (a) loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days, but in no event later than the last day of the Term; (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any law, rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted -7- 9 Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing on the last day of the Term; or (h) as otherwise provided herein. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe which is a part of such Aircraft. An Event of Loss with respect to an Engine shall not, absent an Event of Loss with respect to the Airframe, be deemed an Event of Loss with respect to the Airframe. "Excluded Property" shall have the meaning set forth in Section 9(b) hereto. "Expiration Date" shall mean the date specified in Lease Supplement No. 3, on which date the Basic Term of this Lease shall expire. "FAA" shall mean the Federal Aviation Administra- tion of the United States Department of Transportation or any successor agency. "FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head Lessee to Lessor. "Federal Aviation Act" shall mean the sections of Title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. -8- 10 "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass Through Trust Agreement and each supplement thereto and any certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Aircraft by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its operations. -9- 11 "Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee (in its individual capacity and as trustee under the Pass Through Trusts), the Subordination Agent and each Liquidity Provider, and their respective successors and permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), and any combination thereof and their respective officers, directors, agents, servants, employees, subsidiaries, Affiliates and shareholders. "Indenture" shall mean the Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, and amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture computed on the basis of a 360-day year and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. -10- 12 "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1990 AWA-15] No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1990 AWA-15] No. 2 dated December 31, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 3" shall mean Lease Supplement [GPA 1990 AWA-15] No. 3, substantially in the form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Aircraft hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against Indenture Trustee in its -11- 13 individual capacity (and not as Indenture Trustee) not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Aircraft, the Airframe, any Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative -12- 14 Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Aircraft, the Airframe, either Engine, the Trust Estate, the Operative Documents or the Financing Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20 (except Liens resulting from a transfer not permitted by such Section ) of this Lease or pursuant to Section 10 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other maintenance program for the Aircraft which is approved by the aviation authority of the country of registry and complies with the requirements applicable to maintenance of the Aircraft contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Airframe, Engines, and components of the Aircraft, including, but not -13- 15 limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean, collectively, Manufacturer's Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be applicable in any given circumstance, together in each case with any subcontractor or supplier thereof. "Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French societe a responsabilite limitee, which as of the date hereof is owned by Airbus Industrie. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, any sublease, the Tax Indemnification Agreement, the Financing Documents, and any certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Aircraft Lease Agreement [GPA 1990 AWA-15], with respect to the Aircraft, dated as of September 21, 1990, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect -14- 16 immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, and amended and restated as of the Restatement Date, between the Original Head Lessee and Owner Participant, as amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a Connecticut corporation. "Original Sublease" shall mean the Initial Sublease (as defined in the Original Head Lease) as in effect immediately prior to the Restatement Date. "Other Leases" shall mean the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, each as amended, supplemented or otherwise modified from time to time. "Other Letters of Credit" shall mean any and all letters of credit pursuant to Section 8(l) of the Other Leases. -15- 17 "Owner Participant" shall mean ____________________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Partial Assignment" shall mean the A320 Partial Assignment, Assumption, Release and Amendment Agreement, dated as of December 30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified. "Participation Agreement" shall mean the Participation Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named therein, as amended by the Letter Agreement dated as of July 29, 1993, as the same may be further amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (excluding complete Engines or engines), including Buyer Furnished Equipment, which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Airframe or any Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Airframe or Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). -16- 18 "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Amended and Restated Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as partially assigned to Parent pursuant to the Partial Assignment, to which Airbus Industrie, as guarantor, has consented, and as the same may from time to time be further amended, supplemented or otherwise modified to the extent permitted by the terms thereof. "Purchase Documents" shall mean the Purchase Agreement, the Partial Assignment and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment -17- 19 of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Renewal Rent Payment Date shall be made on the next succeeding Business Day. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Airframe" and "Replacement Engine" shall have the meanings specified in accordance with their description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. "Return Occasion" shall mean the event that occurs when possession of the Aircraft is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral -18- 20 pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20 (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Airframe or such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth, on Exhibit A hereto. "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of (a) an -19- 21 incipient Event of Loss and the operation of Section 11 hereof or (b) the need to correct any failure of the Aircraft to satisfy the requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this definition of "Supplemental Rent", as the case may be, not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Pro Rata Share" means as of any date of determination a fraction the numerator of which is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "equipment notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, and as amended and restated as of November 26, 1996, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any -20- 22 penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Taxing Authority" shall have the meaning specified in Section 10(a). "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20, the Renewal Term, in either case as extended or deemed extended as a result of the occurrence of an event described in clause (iii) to the definition of "Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990 as amended by Trust Supplement No. 1 and as further amended by Trust Supplement No. 2 between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include each Trust Supplement. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1 and Trust Supplement No. 2 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1990 AWA-15] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1990 AWA-15] No. 2 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. -21- 23 "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Aircraft or the Airframe and Engine or engines installed thereon at that time to a third party pursuant to which such Aircraft or the Airframe and Engine or engines (i) shall be operated solely by regular employees of Lessee possessing all current certificates and licenses required under the Federal Aviation Act (it is understood that cabin attendants need not be regular employees of Lessee) and Lessee otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee in accordance with its normal maintenance practices and this Lease, and otherwise the insurance required hereunder shall be maintained and the Aircraft shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term. (a) Time of Delivery. The Aircraft was delivered to Lessee, and Lessee accepted delivery of the Aircraft, on September 28, 1990. (b) [Intentionally Left Blank] (c) Acceptance of Aircraft. The Aircraft leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. -22- 24 Section 4. Rent. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in arrears as set forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable ten (10) Business Days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to the terms hereof shall survive the expiration or termination of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon, and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed -23- 25 to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in the City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except for all Excepted Payments. All Excepted Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft (subject to the provisions of Section -24- 26 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any sublease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or -25- 27 in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRE- SENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR -26- 28 NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has, the right to lease the Aircraft hereunder and (y) on the Delivery Date the Aircraft was free of Head Lessor's Liens and on the Restatement Date the Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) -27- 29 shall survive the execution and delivery of this Lease and the delivery of the Aircraft and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Aircraft continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or airframe or propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect thereto under the Purchase Agreement (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Aircraft), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY -28- 30 MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or either of the Engines or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject any Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that no transfer of the registration of any Engine shall be effected in connection therewith; and provided, further, that (A) no such agreement or arrangement contemplates, results in or requires the transfer of title to any Engine, and (B) if Lessor's title to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and not an Event of Default and Lessee shall comply with Section 11(b) hereof in respect thereof; (2) deliver possession of the Aircraft, the Airframe or any Engine to the manufacturer thereof, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on such Aircraft, Airframe or Engine or any part thereof or for alterations or modifications in or additions to such Aircraft, Airframe or Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Aircraft or the Airframe to the United States of America or any instrumentality or agency thereof pursuant to a sublease; -29- 31 (4) (i) subject the Airframe to the Civil Reserve Air Fleet Program and transfer possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; or (ii) subject the Airframe to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install an Engine on an airframe (other than the Airframe) owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or engines installed thereon; (6) install an Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that each Engine leased to Lessee hereby shall not become subject to the Lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of such Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the -30- 32 owner of such Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install an Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine and Lessee shall comply with Section 11(b) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in such Engine under applicable Law until compliance by Lessee with such Section 11(b); (8) enter into a Wet Lease for the Aircraft or the Airframe and engines installed thereon in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee shall enter into any Wet Lease for a period of more than six months (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given at least ten (10) Business Days prior to entering into such Wet Lease); or (9) sublease the Aircraft or the Airframe to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section -31- 33 6(a) hereof (other than the transfer of an Engine which is deemed to have been an Event of Loss) and any Wet Lease shall be expressly subject and subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of the Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable; (6) The sublessee under any Permitted Sublease, in its consent thereto, shall confirm that from and after the occurrence and continuance of an Event of Default and, unless an Event of Default specified in Section 17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease being deemed or declared -32- 34 in default, Lessor (and, so long as the Lien of the Indenture shall not have been discharged, Indenture Trustee) shall be entitled to enforce directly and in its own name all representations, warranties, indemnities, covenants and agreements under the applicable Permitted Sublease; and (7) Each Permitted Sublease shall (A) provide that (I) the Aircraft or Airframe may not be operated or used other than as provided in this Lease and shall be maintained and operated as required hereunder, (II) Lessor may avoid or terminate such sublease following an Event of Default hereunder and (III) to the extent not accomplished by an assignment of the Permitted Sublease, upon the occurrence of an Event of Default hereunder, Lessee's rights under such Permitted Sublease shall automatically be deemed assigned to Lessor; and (B) be a "net lease" in accordance with industry practice and shall be comparable to, or more restrictive than, this Lease and under such Permitted Sublease (except a sublease to the United States Government or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor under such Permitted Sublease, must be entitled to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted Sublease shall contain provisions regarding such Section 1110 which are substantially the same as the related provisions of this Lease. In addition, from and after the occurrence and continuance of an Event of Default, all rent and other amounts payable by the Permitted Sublessee under such Permitted Sublease shall be paid directly to Indenture Trustee and, upon discharge of the Lien of the Indenture, to Lessor. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Aircraft or the Airframe to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United -33- 35 States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Aircraft in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Aircraft by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Aircraft, to the registry of the Aircraft in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify -34- 36 to do business in such jurisdiction and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. Any Permitted Sublease shall expressly provide that the rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under the other Operative Documents or constitute a waiver of Lessor's rights or remedies hereunder or under the other Operative Documents, and such rights shall continue as if such Permitted Sublease had not occurred. Any Permitted Sublease shall expressly prohibit any further sub-sublease or assignment or any other similar transfer of the Aircraft, Airframe or any Engine or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease together with an assignment, as security for Lessee's obligations hereunder, of such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days following the effective date of such Permitted Sublease. (b) Reciprocal Recognition of Rights. In the event the lessor or secured party of any airframe leased to -35- 37 Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or other security agreement in accordance with Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement covering such airframe also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement, Lessor hereby agrees for the benefit of such lessor or secured party that Lessor will not acquire or claim, as against such lessor or secured party, any right, title or interest in any such engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease or conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. Lessor also hereby agrees for the benefit of the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as against such mortgagee, any right, title or interest in any engine subject to the lien of such mortgage as the result of such engine being installed on the Airframe at any time while such engine is subject to the lien of such mortgage. (c) Lawful Insured Operations. Lessee will not permit the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, any manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the Aircraft is registered with the FAA, or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Aircraft or impair the interest of Lessor therein or impair the validity or priority of the -36- 38 Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Aircraft during the Basic Term or the then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Aircraft, or suffer or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, any other applicable rules, regulations and requirements by any other applicable Governmental Entity, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in -37- 39 the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by Lessee without discrimination and as if Lessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by the central civil aviation authority of the country of registry, and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such condition as is necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times under the Federal Aviation Act and any other applicable law, or the applicable laws of any other jurisdiction in which the Aircraft may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the Aircraft at all times, at its expense, to be duly registered during the Restricted Use Period and, subject to Section 11 of the Refunding Agreement, thereafter under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as (i) while the Aircraft is registered under the Federal Aviation Act, each of the Lessor or its successors or assigns is a "citizen of the United States" as -38- 40 defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not register the Aircraft or permit the Aircraft to be registered under any Laws other than the Federal Aviation Act at any time except as provided in Section 11 of the Refunding Agreement and shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Aircraft and this Lease at all times. At any time after the Restricted Use Period, Lessor, upon compliance with all of the terms of Section 11 of the Refunding Agreement, shall, at the request and sole expense of Lessee, cooperate with Lessee to take all actions reasonably required to change the registration of the Aircraft to another country. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") in the cockpit of the Aircraft and on each Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a location reasonably adjacent to and not less prominent than the airworthiness certificate for the Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Aircraft or either Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Airframe and Engines to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause any sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee on reasonable prior notice at reasonable times to visit, -39- 41 inspect and survey the Aircraft (including, without limitation, a visual "walk around" inspection which may include going on board the Aircraft, and inspecting the Aircraft during maintenance checks when panels and bays are open and subject to view), its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as no Default or Event of Default has occurred hereunder inspections shall be endeavored to be performed during regularly scheduled maintenance checks of the Aircraft. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Airframe or any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial -40- 42 position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Aircraft, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an -41- 43 Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vi) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Aircraft, either Engine or any Part with a repair or replacement cost (including labor charges) in excess of $1,000,000; (vii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (viii) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Aircraft, the Airframe or either Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with -42- 44 or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets (in one or a series of transactions) to any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the Laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. -43- 45 No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Aircraft as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its Federal and state income tax returns (or to permit the filing of the Federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Aircraft, the Airframe or the Engines. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Aircraft, Airframe or Engines only in commercial passenger operations and related cargo operations. Unless Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the Aircraft, Airframe or Engines to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Aircraft, Airframe or Engines for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the -44- 46 Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft to be operated in any member state of the European Union or other European country, Lessee shall deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all aircraft (including, without limitation,the Aircraft) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this amended and restated Lease unless it had available to it the benefits of a lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Aircraft hereunder. The acknowledgement, covenant and agreement contained in this Section 8(i) shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by the Lessor, the Owner Participant and, if the Lien of the Indenture has not been discharged, the Indenture Trustee. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Aircraft, the Airframe, any Engine or Part or the execution, delivery or performance of this Lease or the enforcement thereof against Lessee. -45- 47 (k) Security Opinion; Annual Certificate. (i) During such times that the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, rerecording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Lessor's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Aircraft is registered under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section -46- 48 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (l) Letter of Credit. As security for the obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default has occurred, which amount may be applied, retained or utilized as provided in the penultimate paragraph of this Section 8(l). (ii) be maintained in full force and effect at all times until ninety-one (91) days after the Expiration Date with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that a Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited, will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long term unsecured debt rating at least equal to its rating on the date hereof; -47- 49 (iii) be expressly designated as transferrable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term, or the Lessor is holding proceeds of the Letter of Credit that were retained and not applied as provided herein, then Lessor shall return the Letter of Credit to Lessee or terminate it, and/or return any retained and unapplied proceeds, ninety-one (91) days following the date of such expiration or other termination of this Lease so long as no Default or Event of Default has occurred or is continuing hereunder or under any Other Lease, upon payment in full of all amounts then due and owing to Owner Trustee and Owner Participant under the Operative Documents. If an Event of Default has occurred or is continuing under this Lease or an Event of Default has occurred or is continuing under any Other Lease (as therein defined), in addition to any other rights and remedies Lessor may have hereunder, under any Other Lease, any sublease and any and all other remedies available at Law (including, without limitation, the Uniform Commercial Code as adopted in New York) or equity and upon exercising its rights under the Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to (i) hold any amounts drawn under the Letter of Credit or Other Letters of Credit as security for Lessee's obligations under this Lease or the Other Leases, (ii) retain any amounts drawn under the Letter of Credit or Other Letters of Credit for its own account and apply (including, without limitation, by way of set off against) such drawn amounts as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease and the Other Leases) to remedy any breach by Lessee of this Lease or any other Operative Documents or Other Leases or (iii) recompense Lessor, Owner Participant or any of their respective Affiliates for any loss, damage, cost or expense or other Claim due or owing hereunder or under the Other Leases; provided, however, that in the case of any drawing in respect of any claim for the payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts which would (absent such Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders); provided further, however, that neither the amount so applied at any one time nor the aggregate amount so applied at different times shall reduce the amount of any installment or payment of Rent (whether -48- 50 upon the termination of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in full the amounts required to be paid on account of the principal of and any interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or credit with respect to any amounts so applied. Any amount retained shall be considered the property of Lessor and Lessor may commingle such amount with its general funds and Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum extent permitted by applicable Law, any interest therein. Lessee shall not be entitled to any interest or other earnings on such retained amount and such amount shall not be refundable. On application of all or any portion of the amounts drawn under the Letter of Credit or any Other Letters of Credit in accordance with this Section 8(l), or the Other Leases, Lessee shall on demand reinstate the amount of the Letter of Credit or Other Letters of Credit, as the case may be, to its or their full Face Amount or provide to Lessor one or more additional Letters of Credit meeting the requirements of this Section 8(l), so that the Letter of Credit and each of the Other Letters of Credit at all times equals the original Face Amount provided for herein. During such times as Lessor shall elect to hold all or part of the proceeds of the Letter of Credit or Other Letters of Credit as security for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee shall not be obligated to reinstate the amount of the Letter of Credit or Letters of Credit, as the case may be, in respect of the proceeds so held. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as -49- 51 possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). All Parts which are at any time removed from the Aircraft shall remain the property of Lessor, subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Aircraft and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Aircraft as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine to the extent made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Airframe, Engines or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) -50- 52 may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Airframe, either Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Airframe, Engines and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Aircraft as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Aircraft on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Aircraft without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Aircraft would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Aircraft (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, -51- 53 if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Aircraft, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Aircraft in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Aircraft as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Aircraft. Notwithstanding any other provision hereof, and without limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted Sublessee) may install in the Aircraft audio visual, entertainment or telephonic -52- 54 equipment (including seats with such equipment installed therein) (any or all of which are hereafter referred to as "Excluded Property") in the ordinary course of business, and Lessor shall not claim or acquire title thereto and the rights of the owners thereof therein shall not constitute a default hereunder; provided that (i) any such Excluded Property shall be removed prior to the date of a Return Occasion without causing any damage to the Aircraft and without diminishing or impairing the value, utility, remaining useful life or condition which the Aircraft would have had at such time had such Excluded Property not been installed, (ii) any equipment or seats which such Excluded Property replaces shall be properly stored with the interests of Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee or warehouse, and properly reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are required as a result of such removal and/or reinstallation. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Aircraft, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Airframe or either Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided the Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected -53- 55 to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of and transferring title to Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee provided that in any circumstance in which the Lessor is -54- 56 required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or otherwise, with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, by any federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) the Aircraft, the Airframe, any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re- registration, deregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest -55- 57 in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any modification or reissuance, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, Taxes imposed on, based on, or measured by, the gross or net income of such Indemnitee or Taxes in lieu thereof (including minimum taxes, withholding taxes and taxes on or measured by any item of tax preference) imposed by the federal government of the United States of America (other than taxes in the nature of sales or use taxes, license taxes, or property taxes), (ii) In the case of any Indemnitee, Taxes imposed on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any state, local or foreign government or taxing authority (other than Taxes in the -56- 58 nature of sales Taxes, use Taxes, license Taxes or property Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which arise out of or are caused by any gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee or any sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (A) an Event of Default and the exercise by any Indemnitee of its remedies under this Lease or the Indenture, as the case may be or (B) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms hereof; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed on a transferee of such Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any Part or any interest in the Operative Documents to the extent the amount of any such Taxes exceeds the amount of such Taxes that would have been imposed had there not been any such transfer, unless such transfer results from action by or on behalf of such Indemnitee taken in connection with any Event of Default that has occurred and is continuing or upon the request of the Lessee, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this -57- 59 Section 10(b) or to a failure by Lessee to satisfy its obligations related to such return, (vii) With respect to an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, Taxes which arise out of or are caused by (i) any act or omission or material misrepresentation of any Indemnitee where such act or omission is not permitted by the Financing Documents or the Operative Documents, or (ii) a failure by an Indemnitee to fulfill its contest obligations, and, in the case of the Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a result of a breach of such Indemnitee's representations, warranties, or covenants contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any material respect, or from a failure by such Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Aircraft, (ix) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust, or (x) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) in the case of an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (other than taxes which are in the nature of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee (A) -58- 60 by any state or local Taxing Authority other than Taxes imposed by any such state or local jurisdiction in which the Indemnitee has its principal place of business or is subject to such Tax as a result of business transactions or other presence unrelated to the transactions contemplated by the Financing Documents or the Operative Documents, unless such Taxes are imposed by such jurisdiction solely as a result of (x) the operation of the Aircraft in such jurisdiction or (y) the transactions contemplated by the Operative Documents, to the extent such taxes are directly attributable to such operation of the Aircraft or to such transactions, and (B) by any foreign jurisdiction which are imposed as a result of Lessee's or sublessee's activities in such foreign jurisdiction in connection with the transactions contemplated by the Financing Documents or the Operative Documents, provided, however, a Covered Income Tax also includes the incremental amount of franchise taxes, taxes on doing business, capital stock taxes or taxes on, based on or measured by gross or net income of the original Owner Participant attributable to the Lease (excluding, however, any taxes that would be excluded under any provision other than clauses (i) and (ii) of subsection (b) of this Section 10) which are imposed by the "Home State" of a sublessee (the Home State of a sublessee being the jurisdiction in which such sublessee maintains its principal operations and maintenance center), or in the absence of a Permitted Sublessee, the jurisdiction where the Aircraft is stored, but only to the extent such incremental taxes result from activities of Lessee or Permitted Sublessee under the Lease in or with respect to the Home State or the jurisdiction where the Aircraft is stored, and taking into account in calculating such incremental taxes all state tax benefits and savings in the Home State resulting from activities of Lessee or Permitted Sublessee under the Lease, disregarding for such purpose any actual or constructive changes in ownership of the original Owner Participant, provided, however, that Owner Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's liability for indemnity payments attributable to taxes incurred in sublessee's Home State with respect to each Permitted Sublessee; and (ii) in the case of the Indenture Trustee or the Trust Indenture Estate, any Tax based on or measured by gross or net income, receipts, capital or -59- 61 net worth, franchises, excess profits or conduct of business (including minimum taxes, withholding taxes, and taxes on or measured by any item of tax preference) imposed on such Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to the Owner Participant or Owner Trustee or will notify the Owner Participant or Owner Trustee of such requirement and make such report or return in such manner as shall be reasonably satisfactory to Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient -60- 62 of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of Taxes imposed on the Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest federal corporate income tax rate applicable to Owner Participant in the year of payment and the highest corporate income tax rate in the jurisdiction in which Owner Participant files a consolidated state income tax return (currently Virginia). (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (ii) the reduction calculated on the same basis as the gross up in Section 10(e) hereof in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (i) above would exceed (A) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (B) the portion of all prior payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an -61- 63 indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. In the event that an Indemnitee receives a written notice of a claim which, if sustained, would require the payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's sole expense, in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in whole or in part separately in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, the Lessee shall not be permitted to contest in the name of such Indemnitee if such contest involves Taxes imposed against such Indemnitee that are unrelated to the transactions contemplated by the Financing Documents or the Operative Documents or Taxes based on or measured by the gross or net income of the Indemnitee, and provided, that if the Indemnitee determines in good faith -62- 64 that there is a material possibility of a material adverse impact upon the Indemnitee with respect to such contest, such Indemnitee may retain or reassert control of any contest that Lessee would otherwise be permitted to contest; provided, further, that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) Lessee shall have (a) furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352) exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), provided however, that in the event the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of tax counsel, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which the Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of statutory changes-in-law, it is as likely as not that the position will prevail, and (b) agreed to pay Indemnitee for all reasonable costs and expenses which Indemnitee may incur in contesting such claim (including without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayment of estimated taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interests), (ii) a threshold amount of $50,000 for any individual claim is at issue, (iii) there is no substantial risk or danger of the sale, loss or forfeiture of the Aircraft, (iv) Lessee shall have admitted its liability to indemnify Owner Participant for such claim or set forth in writing why it is not so liable, -63- 65 (v) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, the Lessee shall have advanced to such Indemnitee sufficient funds (on an interest free basis) to make such payments, (vi) no claim shall be appealed to the U.S. Supreme Court, (vii) no appeal of a trial court decision shall be undertaken unless Lessee at its sole cost and expense shall have furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that Indemnitee is more likely than not to prevail in such appeal, and (viii) no Event of Default has occurred and is continuing. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released -64- 66 from its responsibility to contest such claim or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include any member of such affiliated group. (l) Verification. At Lessee's request, the amount of any indemnity payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified by an independent public accounting firm selected by such Indemnitee and reasonably satisfactory to Lessee. In order to enable such accountants to verify the indemnity amount, such Indemnitee shall provide to the accountants (for their own confidential use) information reasonably necessary for such verification to which Lessor has access; provided, however, such information shall not be disclosed to Lessee or any person other than such accountants. The fee of such firm shall be payable by Lessee unless such verification shall result in an adjustment in Lessee's favor exceeding 10% of the amount of the indemnity payment. (m) Survival. All of the obligations and rights of Lessee and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the Engines or any Part thereof shall survive the assignment, or expiration or other termination, of the Lease with respect to the Aircraft for a period of six (6) years from the occurrence of such assignment, or expiration or termination, except that such obligations shall survive the expiration of such six (6) year period with respect to any claim asserted prior to the expiration of such six (6) year period but in either case only to the extent such obligation or claim relates to events which occurred or conditions which existed during the Term. Such obligations are expressly undertaken by Lessee for the benefit of, and shall be enforceable by, Lessor. The provisions of this Section 10(m) are subject to the exclusions of Section 10(b)(viii). -65- 67 Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Airframe. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Airframe or the Airframe and any Engines then installed thereon, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Airframe and such Engines then installed thereon, title to a replacement Airframe (together with the same number of replacement Engines as the Engines), such replacement Airframe and Engines (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe and replacement Engines may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and to be in at least as good operating condition as, the Airframe and the Engines, if any, so replaced (assuming the Airframe and the Engines were maintained in accordance with the requirements of this Agreement, whether or not they are in fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988 and, in the case of Engines, in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to -66- 68 comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and the Engines suffering the Event of Loss as well as all of Lessor's right, title and interest in and to any Engine constituting part of the Aircraft and replaced as provided above but not installed thereon at the time of the Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed part of the property leased hereunder and shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in replacement of the Airframe or Engines under this Section 11(a)(i) shall result in any reduction of Rent. (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss (or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last day of the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, in effect on the last day of the Term, for each day from and including the last day of the Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are -67- 69 paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and Engines suffering the Event of Loss, as well as all of Lessor's right, title and interest, if any, in and to any Engine constituting part of the Aircraft but not installed thereon at the time of the Event of Loss. (b) Event of Loss with Respect to an Engine. Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine and is suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, free of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence -68- 70 of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens), and is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), -69- 71 Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein and shall be deemed part of the same Aircraft as was the Engine replaced thereof. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Conveyance of Replacement Airframe. Prior to or at the time of any conveyance of a replacement Airframe pursuant to Section 11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the following documents which shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect on said date: (i) a full warranty bill of sale, in form and substance satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be approved by the FAA on said date), executed by the owner thereof, in favor of Lessor and, cause supplements, reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), to this Lease, the Indenture (if then in effect) and the Trust Agreement (if then in effect), with respect to such replacement Airframe and to be duly filed for recordation pursuant to the Federal Aviation Act or other applicable Governmental Entity; (ii) the certificate specified in Section 12(f) hereof demonstrating compliance with the insurance requirements of Section 12 with respect to the replacement Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such other evidence of title as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request) to the effect that, upon such conveyance, Lessor will acquire good title to such replacement Airframe free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe may be subject to Permitted Liens), that such replacement Airframe will be leased hereunder to the same extent as the Airframe replaced thereby and will be subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant -70- 72 Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and Replacement Engine and the Lien of the Indenture on such Replacement Airframe and Replacement Engine; and that Lessor, and Indenture Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement airframe and engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement; (iv) a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (v) such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(c), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(c), in each case in form and substance satisfactory to each such party, including evidence that the Aircraft of which the replacement Airframe is a part has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of this Lease and application for registration of such replacement Airframe in the name of Lessor has been duly made with the FAA or other applicable Governmental Entity and Lessee has temporary or permanent authority to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code financing statements covering the replacement Airframe as may be reasonably requested by Lessor or Indenture Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal prepared in accordance with the Appraisal Procedure which confirms that the replacement Airframe and any replacement Engine has a value, utility and remaining useful life at least equal to that of the Airframe and Engines which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of this Lease whether or not they are in fact so maintained; and (ix) furnish Owner Trustee and -71- 73 Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe is free and clear of Lessor's Liens), all of Lessor's right, title and interest in and to the Aircraft which suffered the Event of Loss. No Event of Loss with respect to the Aircraft under the circumstances contemplated by the terms of this Section 11(c) shall result in any reduction in Rent. For all purposes of this Lease, each such replacement Aircraft (together with any Engines constituting part of the Aircraft being replaced as to which an Event of Loss has not occurred) shall be deemed part of the property leased hereunder and shall be deemed the "Aircraft" as defined herein. (d) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer (including a Governmental Entity providing an indemnity in lieu thereof) with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other than insurance or such indemnity proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and other payments, if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section -72- 74 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (e) Requisition for Use by Government with Respect to the Aircraft. Subject to Section 11(f) below, in the event of the requisition for use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other than a requisition constituting an Event of Loss), Lessee shall promptly notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) thereof and all of Lessee's obligations under this Lease with respect to such Airframe or Engine shall continue to the same extent as if such requisition had not occurred. All payments received by Lessor or Lessee from the Governmental Entity for the use of such Airframe or Engine during the Term shall be paid over to, or retained by, Lessee if no Default or Event of Default shall have occurred and be continuing; and all other payments received by Lessor or Lessee from the Governmental Entity shall be paid over to, or retained by, Lessor. If the Airframe and such Engines or engines are not returned by the end of the Term, an Event of Loss shall be deemed to have occurred on the last day of the Term and, on the last day of the Term, Lessee shall either pay to Lessor the amount provided herein for an Event of Loss to the Airframe and such Engines or engines on such date or provide a replacement Aircraft and Engine on such date in the condition provided for in Section 16 and Exhibit E. In the event of the requisition for use by the Governmental Entity of any Engine without the requisition for use of the Airframe, Lessee will replace such Engine hereunder by complying with the terms of Section 11(b) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (f) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all -73- 75 such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability products, completed operation liability covering maintenance of aircraft, but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Aircraft, in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured or -74- 76 additional insured by any act or omission of Lessee or any other insured or additional insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured or additional insured of any breach or violation by Lessee or any other insured or additional insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage), after notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft is located or operated, and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, or the other Indemnitees, or their respective permitted assigns, with respect to the Aircraft. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that -75- 77 carried by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the consent of Lessee) covering the Aircraft, and "all-risk" coverage including transit insurance with respect to Engines and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull insurance reasonably acceptable to Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly-sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged; provided that Indenture Trustee shall not be obligated to request such insurance and shall not be liable for any failure to request such insurance. Anything herein to the contrary notwithstanding, at all times while the Aircraft is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Aircraft. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the -76- 78 other Indemnitees than that carried by Lessee with respect to similar-size aircraft owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Aircraft, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured -77- 79 against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Aircraft, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee, as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which -78- 80 arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and any other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance -79- 81 proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Aircraft and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Aircraft complies with the terms of this Lease. Lessee will cause the Approved Broker -80- 82 to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris if the relevant primary insurer shall have obtained reinsurance and such reinsurance (i) is on the same terms as the original insurance and includes the provisions required by this Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contains a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] dated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it -81- 83 being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for passenger aircraft of similar size as the Aircraft in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on a net after-tax -82- 84 basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims (whether or not based on strict liability), damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, costs and expenses set forth in Section 21(j) hereof and reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee, from (and including) the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Aircraft to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations thereunder or to file the documentation necessary to continue FAA registration of the Aircraft), delivery, nondelivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' -83- 85 Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such defect shall be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding to the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the -84- 86 Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder or thereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part -85- 87 thereof, either in the air or on the ground, or which may be caused by any defect in such Aircraft, Airframe, Engine, engine or Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of the location of such Aircraft at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents (except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the -86- 88 period prior to such disposition), (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee has the right to control the defense thereof is materially -87- 89 prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section . Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Aircraft or of the residual value of the Aircraft. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease or any of the other Operative Documents and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) -88- 90 inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except -89- 91 it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor, cause any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease, and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture -90- 92 Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Aircraft or Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Section 16. Return of Aircraft and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Aircraft to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree, fully equipped with all required Engines, or other engines owned by Lessee (which shall thereupon become Engines as hereinafter provided) meeting the conditions specified in this Section and Exhibit E, duly installed thereon by delivering the same to the Lessor at such location. Lessee shall comply with Section 11(b) and this Section 16 with respect to any engines installed on the Aircraft returned to Lessor hereunder and meeting the conditions described herein which were not originally installed on the Aircraft. (b) Status Upon Return. Upon any Return Occasion hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act and with a current and valid Airworthiness Certificate -91- 93 installed on the Aircraft, unless such certificate shall have been suspended or revoked as a result of the suspension or revocation of the registration of the Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft to be registered in the name of Lessor under the Federal Aviation Act (whether by means of a voting trust agreement or otherwise) in which case the Aircraft shall nevertheless meet all conditions for such certification and for the issuance of such certificate; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Aircraft to be operated under, and in full compliance with, such Airworthiness Certificate and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense with respect to effecting such registration, duly registered in the name of the Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vii) in good and airworthy operating condition, and in the same condition (including, without limitation, in a passenger configuration suitable for passenger revenue service) as when delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (viii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Engines. In the event any engine not owned by Lessor shall be installed on the Aircraft on any Return Occasion, without limiting Lessee's obligations under the -92- 94 Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engines or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engines, assuming the Engines were in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens. (d) Records and Documents. Upon the return of the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Aircraft, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Aircraft and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Aircraft under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Aircraft under the Maintenance Program, in each case as Lessor may reasonably request, and all documentation with respect to the Aircraft set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Aircraft on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of -93- 95 Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Aircraft, Airframe, Engines, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an aircraft which has been operating in regulated commercial air service, shall be delivered to Lessor with the Aircraft. Any documents or records required to be delivered hereunder shall be in English. (e) Condition of Aircraft. Upon any Return Occasion, Lessee shall return such Aircraft to Lessor in such condition that the Aircraft shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Aircraft available to Lessor at the location where the "block 'C' Check" (or equivalent level designated check or checks) required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding -94- 96 compensation to representatives of Lessor), in order to verify that the condition of such Aircraft complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such "block 'C' Check" (or equivalent level check or checks) and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such "block 'C' Check" is being performed and shall have such duration as to permit the opening of any areas of the Aircraft which are necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Aircraft and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to the Aircraft undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations hereunder continued, on a daily basis until the Final Inspection shall have been concluded and Lessee shall pay Rent during any such extension in an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value during such extension shall equal the Stipulated Loss Value on the last day of the Basic Term or Renewal Term, as the case may be); provided, however, that Lessee shall not be required to pay Rent with respect to the Aircraft during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Aircraft Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where -95- 97 the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Aircraft. (h) Corrections and Subsequent Corrections. To the extent that the Aircraft or any Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as such Aircraft is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of such Aircraft and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of such Aircraft, at commercial rates then charged by the Person selected by Lessor to perform such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. Nothing set forth in this paragraph shall constitute a limitation on Lessor's or Owner Participant's ability to recover from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the return of the Aircraft at the time, in the place and in the condition as specified in this Section 16 and Exhibit E hereto. (i) Functional Flight Check. Immediately prior to the expiration of the Term, Lessor will be permitted to conduct a non-commercial functional flight check flight of no more than two (2) hours duration in accordance with the Manufacturer's functional flight check procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft and proper functioning of all systems and components. A qualified pilot and up to five (5) other representatives selected by Lessor may take part in such flight to verify compliance of the Aircraft with the requirements of this Lease, provided, that Lessor shall be responsible for the charges of such qualified pilot and representatives. Lessee may combine the functional flight check provided in this Section 16(i) with the delivery flight specified in Section 16(a) and such functional flight check shall include the landing. Any discrepancy or -96- 98 malfunction detected during any functional flight check (including a functional flight check combined with a delivery flight) shall be corrected, at Lessee's expense, and prior to the expiration of the Term. To the extent that any actions to correct any such discrepancy or malfunction extend beyond the Term, the provisions of the first sentence of Section 16(h) shall apply. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee. (j) Export Certificate of Airworthiness. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably request to assist Lessor in obtaining any required documents in relation to the export of the Aircraft from the United States (including, without limitation, a valid and subsisting export certificate of airworthiness with respect to the Aircraft and export license) and in relation to the deregistration of the Aircraft. (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Aircraft which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Aircraft for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Aircraft after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Aircraft and the records relating thereto to the extent it does not -97- 99 unreasonably interfere with the operation or maintenance of the Aircraft or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the date on which such payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto; provided that any failure of Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless Lessor or Owner Participant delivers notice to Lessee; or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Aircraft outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Aircraft; or (c) Any representation or warranty made by Lessee herein or in the Refunding Agreement or in any certificate furnished by Lessee in connection herewith or therewith is or was incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or the Refunding Agreement, and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, -98- 100 that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c) or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other -99- 101 insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within ninety (90) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of ninety (90) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to all or any part of the Airframe and any or all of the Engines as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's cost and expense, immediately return, and the Lessee hereby agrees that it -100- 102 shall return promptly all or such part of, the Aircraft to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Aircraft) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Aircraft or any Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if such Aircraft were being returned at the end of the Term hereof with respect to such Aircraft. In addition, Lessor or Lessor's agent, at its option and to the extent permitted by applicable Law, may but shall not be obligated to enter upon the premises where all or any part of the Aircraft, Airframe and/or Engines are located to take immediate possession of and, at Lessor's option, remove the same (and/or any engine which is not an Engine but which is installed on the Airframe, subject to the rights of the owner, lessor or secured party thereof) by summary proceedings or otherwise, all without liability accruing to Lessor or Lessor's agent for or by reason of such entry or taking of possession or removal whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. (b) With or without taking possession thereof, sell or cause to be sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty -101- 103 (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Aircraft to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Aircraft for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, Airframe or Engine or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent due to and including the date of sale, plus the amount by which the Stipulated Loss Value of such Aircraft, Airframe or Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In lieu of exercising its rights under paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in advance for the period on and after the Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such -102- 104 Aircraft due and unpaid for any period prior to and including, and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss Value for the Aircraft computed as of such Stipulated Loss Value Date; and upon such payment of liquidated damages and the payment of all other Rent then due hereunder and the discharge of the Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without recourse or warranty (except as to the absence of Lessor's Liens and the Lien of the Indenture), all right, title and interest of Lessor in and to the Aircraft to Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and deliver such documents evidencing such transfer and take such further action as Lessee shall reasonably request. (f) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the Aircraft, Airframe or Engine under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, Airframe or Engine, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Aircraft which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for such Aircraft, Airframe or Engine would have expired but for Lessee's default, discounted periodically (equal to installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (g) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. -103- 105 (h) Lessor may exercise any other right or remedy which may be available to it under applicable laws, or may proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above, until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Aircraft, Airframe or Engine in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's -104- 106 property in repossessing and holding the Aircraft, the Airframe, an Engine or Part except for direct damages caused by Lessor's gross negligence or willful misconduct and (iv) shall have the right to maintain possession of and dispose of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Aircraft, the Airframe, an Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Aircraft, the Airframe, an Engine or Part pursuant to this Section , Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. -105- 107 No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d), (e) or (f) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Aircraft leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Aircraft, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. The provisions of this Section 18 shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. Section 19. Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and perfected security interest in all of Lessor's right, title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee hereby -106- 108 consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) (other than Expected Rights) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. Section 20. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): -107- 109 (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Aircraft for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, in no event less than the greater of 120% of the "fair market sales value" of the Aircraft as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. -108- 110 Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, each of Lessor and Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft or any Engine or Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Aircraft for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (B) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices and instructions between Lessor and Lessee required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). All -109- 111 notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee (until such time as the Lien of the Indenture is discharged) and to Owner Participant, at such address as Owner Participant and Indenture Trustee, respectively, may designate from time to time. All notices and instructions hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft hereunder, and all rents, revenues, profits and income therefrom, in accordance -110- 112 with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it, provided that Lessor and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, Note Holder or any other Person lawfully claiming by or through them, and provided further, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the -111- 113 subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications hereof or thereof, or waivers or consents hereunder or thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the Financing Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft similarly situated to Lessor. (l) U.S. Registration Number. At Lessee's request, Lessor shall use its best efforts to have the Aircraft registered under the United States Registration Number designated by Lessee. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United -112- 114 States District Court for the Southern District of New York. Each of Lessee and Lessor represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee or Lessor hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, it hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Each of Lessee and Lessor hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee or Lessor as from time to time may be designated by Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns (as applicable). Final (after all appeals) judgment (the enforcement of which has not been stayed) against either Lessee or Lessor obtained in any suit originally brought in the court of the State of New York in New York County or in the United States District of New York shall be conclusive, and, to the extent permitted by applicable Law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings, against Lessee or Lessor, as the case may be, or any of their assets in the courts of any country or place where such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS -113- 115 BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all purposes hereof without the -114- 116 necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease, as amended and restated by this Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] (and as otherwise extended, amended, modified, renewed or supplemented), shall be governed by Article 2-A of the Uniform Commercial Code of New York. -115- 117 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by its duly authorized officer as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:__________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:___________________________ Title: -116- 118 TABLE OF CONTENTS
Page ---- Section 1. Definitions..................................................... 1 Section 2. Agreement to Lease.............................................. 21 Section 3. Delivery and Acceptance; Term................................... 22 (a) Time of Delivery...................................... 22 (b) ...................................................... 22 [Intentionally Left Blank] (c) Acceptance of Aircraft................................ 22 (d) Term of Lease......................................... 22 Section 4. Rent............................................................ 22 (a) Rent.................................................. 22 (b) Minimum Payments...................................... 23 (c) Date, Place and Method of Payment..................... 23 (d) Prohibition Against Setoff, Counterclaim, Etc..................................... 24 Section 5. Representations, Warranties and Covenants....................... 26 (a) Warranties and Disclaimer of Warranties............... 26 (b) Representations and Warranties of Lessor................................................ 27 (c) No Amendments to Financing Documents.................. 27 (d) Suppliers' Warranties................................. 27 Section 6. Possession and Use.............................................. 28 (a) Possession............................................ 28 (b) Reciprocal Recognition of Rights...................... 35 (c) Lawful Insured Operations............................. 36 (d) Maintenance........................................... 37 (e) Registration and Insignia............................. 38 Section 7. Inspection...................................................... 39 Section 8. Additional Covenants of Lessee.................................. 40 (a) Financial Information................................. 40 (b) Maintenance of Corporate Existence.................... 42 (c) Maintenance of Status................................. 42 (d) Payment of Taxes...................................... 42 (e) Consolidation, Merger, Etc............................ 42 (f) Information........................................... 43 (g) Place of Business..................................... 44 (h) Certain Limitations on Use............................ 44 (i) Section 1110.......................................... 45
i 119
Page ---- (j) Permits and Licenses.................................. 45 (k) Security Opinion; Annual Certificate.................. 45 (l) Letter of Credit...................................... 46 Section 9. Replacement of Parts; Alterations, Modifications and Additions........................... 49 (a) Replacement of Parts.................................. 49 (b) Alterations, Modifications and Additions............................................. 50 (c) Pooling............................................... 52 Section 10. General Tax Indemnity.......................................... 53 (a) Indemnity............................................. 53 (b) Exclusions............................................ 55 (c) Covered Income Tax.................................... 57 (d) Reports and Returns................................... 59 (e) After-Tax Basis....................................... 59 (f) Tax Benefit........................................... 60 (g) Payment............................................... 60 (h) Contest............................................... 61 (i) Refund................................................ 63 (j) Diligence............................................. 63 (k) Affiliated Group...................................... 63 (l) Verification.......................................... 64 (m) Survival.............................................. 64 Section 11. Loss, Damage and Requisition................................... 64 (a) Event of Loss with Respect to the Airframe.............................................. 64 (b) Event of Loss with Respect to an Engine............... 67 (c) Conveyance of Replacement Airframe.................... 68 (d) Application of Proceeds and Payments.................. 70 (e) Requisition for Use by Government with Respect to the Aircraft............................... 71 (f) Application in Default................................ 72 Section 12. Insurance...................................................... 72 (a) Public Liability and Property Damage Insurance. ........................................... 72 (b) Insurance Against Loss or Damage...................... 74 (c) Application of Insurance Proceeds for an Event of Loss...................................... 77 (d) Application of Insurance Proceeds for Other than an Event of Loss........................... 77 (e) Application in Default................................ 78 (f) Certificates.......................................... 78 (g) Reinsurance........................................... 79
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Page ---- (h) Storage............................................... 80 (i) Amounts Held.......................................... 80 (j) After the Term........................................ 80 (k) Governmental Indemnity................................ 80 Section 13. General Indemnity.............................................. 81 Section 14. Liens.......................................................... 86 Section 15. Protection of Title and Further Assurances............................................ 87 Section 16. Return of Aircraft and Records................................. 89 (a) Return................................................ 89 (b) Status Upon Return.................................... 90 (c) Engines............................................... 91 (d) Records and Documents................................. 91 (e) Condition of Aircraft................................. 92 (f) Final Inspection...................................... 93 (g) Aircraft Records and Documents........................ 94 (h) Corrections and Subsequent Corrections................ 94 (i) Functional Flight Check............................... 94 (j) Export Certificate of Airworthiness................... 95 (k) Service Bulletin and Modification Kits................ 95 (l) Storage Upon Return................................... 95 (m) Resale/Release Cooperation............................ 96 Section 17. Events of Default.............................................. 96 Section 18. Remedies....................................................... 98 Section 19. Security for Obligations..............................104 Section 20. Renewal Option.................................................106 Section 21. Miscellaneous..................................................107 (a) Severability, Amendment, and Construction..........................................107 (b) GOVERNING LAW.........................................107 (c) Notices...............................................108 (d) Lessor's Right to Perform for Lessee..................108 (e) Counterparts..........................................108 (f) Quiet Enjoyment.......................................108 (g) Brokers...............................................109 (h) Investment of Funds...................................109 (i) Entire Agreement; Amendment...........................110 (j) Expenses..............................................110
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Page ---- (k) Federal Bankruptcy Code...............................110 (l) U.S. Registration Number..............................110 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial......................110 (n) Limitation on Recourse................................112 (o) Successor Trustee.....................................113 (p) Article 2-A of the UCC................................113
iv 122 ANNEXES Annex I - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Aircraft Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 3 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Assignment of Permitted Sublessee v EX-4.29 30 RESTATED AIRCRAFT LEASE AGREEMENT[GPA 1990 AWA-16] 1 EXHIBIT 4.29 THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1990 AWA-16] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, FLEET NATIONAL BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-16] DATED AS OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY FLEET NATIONAL BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF. AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT [GPA 1990 AWA-16] Dated as of September 21, 1990 Amended and Restated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as amended Lessor and AMERICA WEST AIRLINES, INC. Lessee One Airbus A320-231 Aircraft Manufacturer's Serial No. 099 U.S. Registration No. N637AW 2 AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of September 21, 1990 and amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as defined in the Pass Through Trust Agreement); and the term 3 "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or elect or cause the direction or election of the management and policies of a Person whether by contract or otherwise. "Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement d'interet economique formed under the laws of the French Republic, and its successors and assigns. "Aircraft" shall mean the Airframe leased hereunder and described in Lease Supplement No. 1 (or any airframe from time to time substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any Engine substituted therefor hereunder) with respect to such Airframe, whether or not any such initial or substituted Engines may from time to time no longer be installed on the Airframe or may be installed on any other airframe, (ii) Parts or components thereof, (iii) spare parts or ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Aircraft Records and Documents and all other logs, manuals and records with respect to such Aircraft, and (v) all substitutions, replacements and renewals of any and all thereof. "Aircraft Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "Airframe" shall mean (a) the Airbus Industrie model A320-231 aircraft (except Engines or engines from time to time installed thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder, and any such model aircraft (except Engines or engines from time to time installed thereon) which may from time to time be substituted for such aircraft (except Engines or engines from time to time installed thereon) pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same shall be incorporated or installed on or attached to the Airframe, or so long as title thereto shall remain vested in Lessor in -2- 4 accordance with the terms of Section 9 hereof after removal from the Airframe; provided, however, that at such time as an aircraft (except Engines or engines from time to time installed thereon) shall be deemed part of the property leased hereunder in substitution for the Airframe pursuant to the applicable provisions hereof and the replacement Airframe shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), the replaced Airframe shall cease to be the Airframe hereunder. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that such Aircraft, Airframe, Engine or Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Aircraft as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal -3- 5 pursuant to Section 18 in which case only Lessor shall select such appraiser (which appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Aircraft shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to Section 4(a)(i). -4- 6 "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 3. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Buyer Furnished Equipment" shall mean the equipment which was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar equipment furnished to Lessee. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. -5- 7 "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. "Consent and Guaranty" shall mean the Amended and Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated as of December 30, 1988, in the form attached to the Purchase Agreement. "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean September 28, 1990, being the date the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) each of the two IAE Model V2500 engines listed by manufacturer's serial number in Lease Supplement No. 1 and initially installed on the Airframe covered by such Lease Supplement, whether or not from time to time thereafter no longer installed on the Airframe or installed on any other aircraft or airframe, and (ii) any replacement engine which may from time to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for any Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. The term "Engines" -6- 8 means, as of any date of determination, both Engines then leased hereunder. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Aircraft, Airframe or either Engine: (a) loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days, but in no event later than the last day of the Term; (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any law, rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted -7- 9 Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing on the last day of the Term; or (h) as otherwise provided herein. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe which is a part of such Aircraft. An Event of Loss with respect to an Engine shall not, absent an Event of Loss with respect to the Airframe, be deemed an Event of Loss with respect to the Airframe. "Excluded Property" shall have the meaning set forth in Section 9(b) hereto. "Expiration Date" shall mean the date specified in Lease Supplement No. 3, on which date the Basic Term of this Lease shall expire. "FAA" shall mean the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head Lessee to Lessor. "Federal Aviation Act" shall mean the sections of Title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. -8- 10 "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass Through Trust Agreement and each supplement thereto and any certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Aircraft by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its operations. -9- 11 "Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee (in its individual capacity and as trustee under the Pass Through Trusts), the Subordination Agent and each Liquidity Provider, and their respective successors and permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), and any combination thereof and their respective officers, directors, agents, servants, employees, subsidiaries, Affiliates and shareholders. "Indenture" shall mean the Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, and amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture computed on the basis of a 360-day year and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. -10- 12 "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1990 AWA-16] No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1990 AWA-16] No. 2 dated December 31, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 3" shall mean Lease Supplement [GPA 1990 AWA-16] No. 3, substantially in the form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Aircraft hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against Indenture Trustee in its -11- 13 individual capacity (and not as Indenture Trustee) not related to its interest in the Aircraft or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Aircraft, the Airframe, any Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative -12- 14 Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Aircraft, the Airframe, either Engine, the Trust Estate, the Operative Documents or the Financing Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20 (except Liens resulting from a transfer not permitted by such Section) of this Lease or pursuant to Section 10 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Aircraft or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other maintenance program for the Aircraft which is approved by the aviation authority of the country of registry and complies with the requirements applicable to maintenance of the Aircraft contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Airframe, Engines, and components of the Aircraft, including, but not -13- 15 limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean, collectively, Manufacturer's Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be applicable in any given circumstance, together in each case with any subcontractor or supplier thereof. "Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French societe a responsabilite limitee, which as of the date hereof is owned by Airbus Industrie. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, any sublease, the Tax Indemnification Agreement, the Financing Documents, and any certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Aircraft Lease Agreement [GPA 1990 AWA-16], with respect to the Aircraft, dated as of September 21, 1990, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect -14- 16 immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, and amended and restated as of the Restatement Date, between the Original Head Lessee and Owner Participant, as amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a Connecticut corporation. "Original Sublease" shall mean the Initial Sublease (as defined in the Original Head Lease) as in effect immediately prior to the Restatement Date. "Other Leases" shall mean the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, each as amended, supplemented or otherwise modified from time to time. "Other Letters of Credit" shall mean any and all letters of credit pursuant to Section 8(l) of the Other Leases. -15- 17 "Owner Participant" shall mean _____________ ___________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Partial Assignment" shall mean the A320 Partial Assignment, Assumption, Release and Amendment Agreement, dated as of December 30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified. "Participation Agreement" shall mean the Participation Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named therein, as amended by the Letter Agreement dated as of July 29, 1993, as the same may be further amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (excluding complete Engines or engines), including Buyer Furnished Equipment, which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Airframe or any Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Airframe or Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). -16- 18 "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Amended and Restated Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as partially assigned to Parent pursuant to the Partial Assignment, to which Airbus Industrie, as guarantor, has consented, and as the same may from time to time be further amended, supplemented or otherwise modified to the extent permitted by the terms thereof. "Purchase Documents" shall mean the Purchase Agreement, the Partial Assignment and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment -17- 19 of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Renewal Rent Payment Date shall be made on the next succeeding Business Day. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Airframe" and "Replacement Engine" shall have the meanings specified in accordance with their description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. "Return Occasion" shall mean the event that occurs when possession of the Aircraft is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral -18- 20 pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20 (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Airframe or such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth, on Exhibit A hereto. "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of (a) an -19- 21 incipient Event of Loss and the operation of Section 11 hereof or (b) the need to correct any failure of the Aircraft to satisfy the requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this definition of "Supplemental Rent", as the case may be, not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Pro Rata Share" means as of any date of determination a fraction the numerator of which is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "equipment notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, and as amended and restated as of November 26, 1996, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any -20- 22 penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Taxing Authority" shall have the meaning specified in Section 10(a). "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20, the Renewal Term, in either case as extended or deemed extended as a result of the occurrence of an event described in clause (iii) to the definition of "Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990 as amended by Trust Supplement No. 1 and as further amended by Trust Supplement No. 2 between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include each Trust Supplement. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1 and Trust Supplement No. 2 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1990 AWA-16] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1990 AWA-16] No. 2 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. -21- 23 "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Aircraft or the Airframe and Engine or engines installed thereon at that time to a third party pursuant to which such Aircraft or the Airframe and Engine or engines (i) shall be operated solely by regular employees of Lessee possessing all current certificates and licenses required under the Federal Aviation Act (it is understood that cabin attendants need not be regular employees of Lessee) and Lessee otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee in accordance with its normal maintenance practices and this Lease, and otherwise the insurance required hereunder shall be maintained and the Aircraft shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term. (a) Time of Delivery. The Aircraft was delivered to Lessee, and Lessee accepted delivery of the Aircraft, on September 28, 1990. (b) [Intentionally Left Blank] (c) Acceptance of Aircraft. The Aircraft leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. -22- 24 Section 4. Rent. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in arrears as set forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable ten (10) Business Days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to the terms hereof shall survive the expiration or termination of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon, and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed -23- 25 to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in the City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except for all Excepted Payments. All Excepted Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft (subject to the provisions of Section -24- 26 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any sublease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or -25- 27 in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRE- SENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR -26- 28 NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has, the right to lease the Aircraft hereunder and (y) on the Delivery Date the Aircraft was free of Head Lessor's Liens and on the Restatement Date the Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) -27- 29 shall survive the execution and delivery of this Lease and the delivery of the Aircraft and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Aircraft continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or airframe or propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect thereto under the Purchase Agreement (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Aircraft), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY -28- 30 MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Aircraft, the Airframe or either of the Engines or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject any Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that no transfer of the registration of any Engine shall be effected in connection therewith; and provided, further, that (A) no such agreement or arrangement contemplates, results in or requires the transfer of title to any Engine, and (B) if Lessor's title to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and not an Event of Default and Lessee shall comply with Section 11(b) hereof in respect thereof; (2) deliver possession of the Aircraft, the Airframe or any Engine to the manufacturer thereof, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on such Aircraft, Airframe or Engine or any part thereof or for alterations or modifications in or additions to such Aircraft, Airframe or Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Aircraft or the Airframe to the United States of America or any instrumentality or agency thereof pursuant to a sublease; -29- 31 (4) (i) subject the Airframe to the Civil Reserve Air Fleet Program and transfer possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Airframe or any Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; or (ii) subject the Airframe to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install an Engine on an airframe (other than the Airframe) owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or engines installed thereon; (6) install an Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that each Engine leased to Lessee hereby shall not become subject to the Lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of such Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the -30- 32 owner of such Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install an Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine and Lessee shall comply with Section 11(b) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in such Engine under applicable Law until compliance by Lessee with such Section 11(b); (8) enter into a Wet Lease for the Aircraft or the Airframe and engines installed thereon in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee shall enter into any Wet Lease for a period of more than six months (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given at least ten (10) Business Days prior to entering into such Wet Lease); or (9) sublease the Aircraft or the Airframe to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section -31- 33 6(a) hereof (other than the transfer of an Engine which is deemed to have been an Event of Loss) and any Wet Lease shall be expressly subject and subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of the Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable; (6) The sublessee under any Permitted Sublease, in its consent thereto, shall confirm that from and after the occurrence and continuance of an Event of Default and, unless an Event of Default specified in Section 17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease being deemed or declared -32- 34 in default, Lessor (and, so long as the Lien of the Indenture shall not have been discharged, Indenture Trustee) shall be entitled to enforce directly and in its own name all representations, warranties, indemnities, covenants and agreements under the applicable Permitted Sublease; and (7) Each Permitted Sublease shall (A) provide that (I) the Aircraft or Airframe may not be operated or used other than as provided in this Lease and shall be maintained and operated as required hereunder, (II) Lessor may avoid or terminate such sublease following an Event of Default hereunder and (III) to the extent not accomplished by an assignment of the Permitted Sublease, upon the occurrence of an Event of Default hereunder, Lessee's rights under such Permitted Sublease shall automatically be deemed assigned to Lessor; and (B) be a "net lease" in accordance with industry practice and shall be comparable to, or more restrictive than, this Lease and under such Permitted Sublease (except a sublease to the United States Government or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor under such Permitted Sublease, must be entitled to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted Sublease shall contain provisions regarding such Section 1110 which are substantially the same as the related provisions of this Lease. In addition, from and after the occurrence and continuance of an Event of Default, all rent and other amounts payable by the Permitted Sublessee under such Permitted Sublease shall be paid directly to Indenture Trustee and, upon discharge of the Lien of the Indenture, to Lessor. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Aircraft or the Airframe to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United -33- 35 States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Aircraft in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Aircraft by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Aircraft, to the registry of the Aircraft in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify -34- 36 to do business in such jurisdiction and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. Any Permitted Sublease shall expressly provide that the rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under the other Operative Documents or constitute a waiver of Lessor's rights or remedies hereunder or under the other Operative Documents, and such rights shall continue as if such Permitted Sublease had not occurred. Any Permitted Sublease shall expressly prohibit any further sub-sublease or assignment or any other similar transfer of the Aircraft, Airframe or any Engine or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease together with an assignment, as security for Lessee's obligations hereunder, of such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days following the effective date of such Permitted Sublease. (b) Reciprocal Recognition of Rights. In the event the lessor or secured party of any airframe leased to -35- 37 Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or other security agreement in accordance with Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement covering such airframe also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement, Lessor hereby agrees for the benefit of such lessor or secured party that Lessor will not acquire or claim, as against such lessor or secured party, any right, title or interest in any such engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease or conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. Lessor also hereby agrees for the benefit of the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as against such mortgagee, any right, title or interest in any engine subject to the lien of such mortgage as the result of such engine being installed on the Airframe at any time while such engine is subject to the lien of such mortgage. (c) Lawful Insured Operations. Lessee will not permit the Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, any manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the Aircraft is registered with the FAA, or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Aircraft or impair the interest of Lessor therein or impair the validity or priority of the -36- 38 Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Aircraft during the Basic Term or the then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Aircraft, or suffer or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, any other applicable rules, regulations and requirements by any other applicable Governmental Entity, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in -37- 39 the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by Lessee without discrimination and as if Lessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Aircraft, as shall be the case with respect to similar aircraft and engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Aircraft and was going to use the Aircraft in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by the central civil aviation authority of the country of registry, and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such condition as is necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times under the Federal Aviation Act and any other applicable law, or the applicable laws of any other jurisdiction in which the Aircraft may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the Aircraft at all times, at its expense, to be duly registered during the Restricted Use Period and, subject to Section 11 of the Refunding Agreement, thereafter under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as (i) while the Aircraft is registered under the Federal Aviation Act, each of the Lessor or its successors or assigns is a "citizen of the United States" as -38- 40 defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not register the Aircraft or permit the Aircraft to be registered under any Laws other than the Federal Aviation Act at any time except as provided in Section 11 of the Refunding Agreement and shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Aircraft and this Lease at all times. At any time after the Restricted Use Period, Lessor, upon compliance with all of the terms of Section 11 of the Refunding Agreement, shall, at the request and sole expense of Lessee, cooperate with Lessee to take all actions reasonably required to change the registration of the Aircraft to another country. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") in the cockpit of the Aircraft and on each Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a location reasonably adjacent to and not less prominent than the airworthiness certificate for the Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Aircraft or either Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Airframe and Engines to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause any sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee on reasonable prior notice at reasonable times to visit, -39- 41 inspect and survey the Aircraft (including, without limitation, a visual "walk around" inspection which may include going on board the Aircraft, and inspecting the Aircraft during maintenance checks when panels and bays are open and subject to view), its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as no Default or Event of Default has occurred hereunder inspections shall be endeavored to be performed during regularly scheduled maintenance checks of the Aircraft. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Airframe or any Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial -40- 42 position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Aircraft, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an -41- 43 Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vi) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Aircraft, either Engine or any Part with a repair or replacement cost (including labor charges) in excess of $1,000,000; (vii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (viii) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Aircraft, the Airframe or either Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with -42- 44 or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets (in one or a series of transactions) to any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the Laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. -43- 45 No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Aircraft as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its Federal and state income tax returns (or to permit the filing of the Federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Aircraft, the Airframe or the Engines. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Aircraft, Airframe or Engines only in commercial passenger operations and related cargo operations. Unless Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the Aircraft, Airframe or Engines to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Aircraft, Airframe or Engines for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the -44- 46 Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft to be operated in any member state of the European Union or other European country, Lessee shall deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all aircraft (including, without limitation,the Aircraft) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this amended and restated Lease unless it had available to it the benefits of a lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Aircraft hereunder. The acknowledgement, covenant and agreement contained in this Section 8(i) shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by the Lessor, the Owner Participant and, if the Lien of the Indenture has not been discharged, the Indenture Trustee. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Aircraft, the Airframe, any Engine or Part or the execution, delivery or performance of this Lease or the enforcement thereof against Lessee. -45- 47 (k) Security Opinion; Annual Certificate. (i) During such times that the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, rerecording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Lessor's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Aircraft is registered under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section -46- 48 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Aircraft and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (l) Letter of Credit. As security for the obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default has occurred, which amount may be applied, retained or utilized as provided in the penultimate paragraph of this Section 8(l). (ii) be maintained in full force and effect at all times until ninety-one (91) days after the Expiration Date with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that a Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited, will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long term unsecured debt rating at least equal to its rating on the date hereof; -47- 49 (iii) be expressly designated as transferrable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term or the Lessor is holding proceeds of the Letter of Credit that were retained and not applied as provided herein, then Lessor shall return the Letter of Credit to Lessee or terminate it, and/or return any retained and unapplied proceeds, ninety-one (91) days following the date of such expiration or other termination of this Lease so long as no Default or Event of Default has occurred or is continuing hereunder or under any Other Lease, upon payment in full of all amounts then due and owing to Owner Trustee and Owner Participant under the Operative Documents. If an Event of Default has occurred or is continuing under this Lease or an Event of Default has occurred or is continuing under any Other Lease (as therein defined), in addition to any other rights and remedies Lessor may have hereunder, under any Other Lease, any sublease and any and all other remedies available at Law (including, without limitation, the Uniform Commercial Code as adopted in New York) or equity and upon exercising its rights under the Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to (i) hold any amounts drawn under the Letter of Credit or Other Letters of Credit as security for Lessee's obligations under this Lease or the Other Leases, (ii) retain any amounts drawn under the Letter of Credit or Other Letters of Credit for its own account and apply (including, without limitation, by way of set off against) such drawn amounts as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease and the Other Leases) to remedy any breach by Lessee of this Lease or any other Operative Documents or Other Leases or (iii) recompense Lessor, Owner Participant or any of their respective Affiliates for any loss, damage, cost or expense or other Claim; due or owing hereunder or under the Other Leases; provided, however, that in the case of any drawing in respect of any claim for the payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts which would (absent such Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders); provided further, however, that neither the amount so applied at any one time nor the aggregate amount so applied at different times shall reduce the amount of any installment or payment of Rent (whether -48- 50 upon the termination of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in full the amounts required to be paid on account of the principal of and any interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or credit with respect to any amounts so applied. Any amount retained shall be considered the property of Lessor and Lessor may commingle such amount with its general funds and Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum extent permitted by applicable Law, any interest therein. Lessee shall not be entitled to any interest or other earnings on such retained amount and such amount shall not be refundable. On application of all or any portion of the amounts drawn under the Letter of Credit or any Other Letters of Credit in accordance with this Section 8(l), or the Other Leases, Lessee shall on demand reinstate the amount of the Letter of Credit or Other Letters of Credit, as the case may be, to its or their full Face Amount or provide to Lessor one or more additional Letters of Credit meeting the requirements of this Section 8(l), so that the Letter of Credit and each of the Other Letters of Credit at all times equals the original Face Amount provided for herein. During such times as Lessor shall elect to hold all or part of the proceeds of the Letter of Credit or Other Letters of Credit as security for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee shall not be obligated to reinstate the amount of the Letter of Credit or Letters of Credit, as the case may be, in respect of the proceeds so held. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as -49- 51 possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). All Parts which are at any time removed from the Aircraft shall remain the property of Lessor, subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Aircraft and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Aircraft as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine to the extent made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Airframe, Engines or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Airframe and either Engine as Lessee (or,if a Permitted Sublease is in effect, a Permitted Sublessee) -50- 52 may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Airframe, either Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Airframe, Engines and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Aircraft as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Aircraft on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Aircraft without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Aircraft would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Aircraft (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, -51- 53 if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Aircraft, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Aircraft in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Aircraft as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Aircraft. Notwithstanding any other provision hereof, and without limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted Sublessee) may install in the Aircraft audio visual, entertainment or telephonic -52- 54 equipment (including seats with such equipment installed therein) (any or all of which are hereafter referred to as "Excluded Property") in the ordinary course of business, and Lessor shall not claim or acquire title thereto and the rights of the owners thereof therein shall not constitute a default hereunder; provided that (i) any such Excluded Property shall be removed prior to the date of a Return Occasion without causing any damage to the Aircraft and without diminishing or impairing the value, utility, remaining useful life or condition which the Aircraft would have had at such time had such Excluded Property not been installed, (ii) any equipment or seats which such Excluded Property replaces shall be properly stored with the interests of Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee or warehouse, and properly reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all repairs which are required as a result of such removal and/or reinstallation. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Aircraft, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Airframe or either Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided the Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected -53- 55 to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of and transferring title to Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee provided that in any circumstance in which the Lessor is -54- 56 required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or otherwise, with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, by any federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) the Aircraft, the Airframe, any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re-registration, deregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest -55- 57 in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any modification or reissuance, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, Taxes imposed on, based on, or measured by, the gross or net income of such Indemnitee or Taxes in lieu thereof (including minimum taxes, withholding taxes and taxes on or measured by any item of tax preference) imposed by the federal government of the United States of America (other than taxes in the nature of sales or use taxes, license taxes, or property taxes), (ii) In the case of any Indemnitee, Taxes imposed on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any state, local or foreign government or taxing authority (other than Taxes in the -56- 58 nature of sales Taxes, use Taxes, license Taxes or property Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which arise out of or are caused by any gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee or any sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (A) an Event of Default and the exercise by any Indemnitee of its remedies under this Lease or the Indenture, as the case may be or (B) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms hereof; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed on a transferee of such Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any Part or any interest in the Operative Documents to the extent the amount of any such Taxes exceeds the amount of such Taxes that would have been imposed had there not been any such transfer, unless such transfer results from action by or on behalf of such Indemnitee taken in connection with any Event of Default that has occurred and is continuing or upon the request of the Lessee, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this -57- 59 Section 10(b) or to a failure by Lessee to satisfy its obligations related to such return, (vii) With respect to an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, Taxes which arise out of or are caused by (i) any act or omission or material misrepresentation of any Indemnitee where such act or omission is not permitted by the Financing Documents or the Operative Documents, or (ii) a failure by an Indemnitee to fulfill its contest obligations, and, in the case of the Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a result of a breach of such Indemnitee's representations, warranties, or covenants contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any material respect, or from a failure by such Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Aircraft, (ix) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust, or (x) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) in the case of an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (other than taxes which are in the nature of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee (A) -58- 60 by any state or local Taxing Authority other than Taxes imposed by any such state or local jurisdiction in which the Indemnitee has its principal place of business or is subject to such Tax as a result of business transactions or other presence unrelated to the transactions contemplated by the Financing Documents or the Operative Documents, unless such Taxes are imposed by such jurisdiction solely as a result of (x) the operation of the Aircraft in such jurisdiction or (y) the transactions contemplated by the Operative Documents, to the extent such taxes are directly attributable to such operation of the Aircraft or to such transactions, and (B) by any foreign jurisdiction which are imposed as a result of Lessee's or sublessee's activities in such foreign jurisdiction in connection with the transactions contemplated by the Financing Documents or the Operative Documents, provided, however, a Covered Income Tax also includes the incremental amount of franchise taxes, taxes on doing business, capital stock taxes or taxes on, based on or measured by gross or net income of the original Owner Participant attributable to the Lease (excluding, however, any taxes that would be excluded under any provision other than clauses (i) and (ii) of subsection (b) of this Section 10) which are imposed by the "Home State" of a sublessee (the Home State of a sublessee being the jurisdiction in which such sublessee maintains its principal operations and maintenance center), or in the absence of a Permitted Sublessee, the jurisdiction where the Aircraft is stored, but only to the extent such incremental taxes result from activities of Lessee or Permitted Sublessee under the Lease in or with respect to the Home State or the jurisdiction where the Aircraft is stored, and taking into account in calculating such incremental taxes all state tax benefits and savings in the Home State resulting from activities of Lessee or Permitted Sublessee under the Lease, disregarding for such purpose any actual or constructive changes in ownership of the original Owner Participant, provided, however, that Owner Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's liability for indemnity payments attributable to taxes incurred in sublessee's Home State with respect to each Permitted Sublessee; and (ii) in the case of the Indenture Trustee or the Trust Indenture Estate, any Tax based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (including minimum taxes, withholding taxes, -59- 61 and taxes on or measured by any item of tax preference) imposed on such Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to the Owner Participant or Owner Trustee or will notify the Owner Participant or Owner Trustee of such requirement and make such report or return in such manner as shall be reasonably satisfactory to Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in -60- 62 the case of Taxes imposed on the Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest federal corporate income tax rate applicable to Owner Participant in the year of payment and the highest corporate income tax rate in the jurisdiction in which Owner Participant files a consolidated state income tax return (currently Virginia). (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (ii) the reduction calculated on the same basis as the gross up in Section 10(e) hereof in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (i) above would exceed (A) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (B) the portion of all prior payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes -61- 63 are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. In the event that an Indemnitee receives a written notice of a claim which, if sustained, would require the payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's sole expense, in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in whole or in part separately in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, the Lessee shall not be permitted to contest in the name of such Indemnitee if such contest involves Taxes imposed against such Indemnitee that are unrelated to the transactions contemplated by the Financing Documents or the Operative Documents or Taxes based on or measured by the gross or net income of the Indemnitee, and provided, that if the Indemnitee determines in good faith that there is a material possibility of a material adverse impact upon the Indemnitee with respect to such contest, such Indemnitee may retain or reassert control of any contest that Lessee would otherwise be permitted to contest; provided, further, that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: -62- 64 (i) Lessee shall have (a) furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352) exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), provided however, that in the event the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of tax counsel, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which the Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of statutory changes-in-law, it is as likely as not that the position will prevail, and (b) agreed to pay Indemnitee for all reasonable costs and expenses which Indemnitee may incur in contesting such claim (including without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayment of estimated taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interests), (ii) a threshold amount of $50,000 for any individual claim is at issue, (iii) there is no substantial risk or danger of the sale, loss or forfeiture of the Aircraft, (iv) Lessee shall have admitted its liability to indemnify Owner Participant for such claim or set forth in writing why it is not so liable, (v) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, the Lessee shall have advanced to such Indemnitee sufficient funds (on an interest free basis) to make such payments, (vi) no claim shall be appealed to the U.S. Supreme Court, (vii) no appeal of a trial court decision shall be undertaken unless Lessee at its sole cost and -63- 65 expense shall have furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that Indemnitee is more likely than not to prevail in such appeal, and (viii) no Event of Default has occurred and is continuing. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released from its responsibility to contest such claim or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a -64- 66 consolidated Federal income tax return, the term "Indemnitee" shall mean and include any member of such affiliated group. (l) Verification. At Lessee's request, the amount of any indemnity payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified by an independent public accounting firm selected by such Indemnitee and reasonably satisfactory to Lessee. In order to enable such accountants to verify the indemnity amount, such Indemnitee shall provide to the accountants (for their own confidential use) information reasonably necessary for such verification to which Lessor has access; provided, however, such information shall not be disclosed to Lessee or any person other than such accountants. The fee of such firm shall be payable by Lessee unless such verification shall result in an adjustment in Lessee's favor exceeding 10% of the amount of the indemnity payment. (m) Survival. All of the obligations and rights of Lessee and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the Engines or any Part thereof shall survive the assignment, or expiration or other termination, of the Lease with respect to the Aircraft for a period of six (6) years from the occurrence of such assignment, or expiration or termination, except that such obligations shall survive the expiration of such six (6) year period with respect to any claim asserted prior to the expiration of such six (6) year period but in either case only to the extent such obligation or claim relates to events which occurred or conditions which existed during the Term. Such obligations are expressly undertaken by Lessee for the benefit of, and shall be enforceable by, Lessor. The provisions of this Section 10(m) are subject to the exclusions of Section 10(b)(viii). Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Airframe. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Airframe or the Airframe and any Engines then installed thereon, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to -65- 67 have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Airframe and such Engines then installed thereon, title to a replacement Airframe (together with the same number of replacement Engines as the Engines), such replacement Airframe and Engines (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe and replacement Engines may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and to be in at least as good operating condition as, the Airframe and the Engines, if any, so replaced (assuming the Airframe and the Engines were maintained in accordance with the requirements of this Agreement, whether or not they are in fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988 and, in the case of Engines, in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and the Engines suffering the Event of Loss as well as all of Lessor's right, title and interest in and to any Engine constituting part of the Aircraft and replaced as provided above but not installed thereon at the time of the Event of Loss. For all purposes hereof, a replacement Airframe shall -66- 68 be deemed part of the property leased hereunder and shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in replacement of the Airframe or Engines under this Section 11(a)(i) shall result in any reduction of Rent. (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss (or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last day of the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, in effect on the last day of the Term, for each day from and including the last day of the Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Airframe and Engines suffering the Event of Loss, as well as all of Lessor's right, title and interest, if any, in and to any Engine constituting part of the Aircraft but not installed thereon at the time of the Event of Loss. (b) Event of Loss with Respect to an Engine. Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after -67- 69 such occurrence convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine and is suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, free of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens), and is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in -68- 70 the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), -69- 71 Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein and shall be deemed part of the same Aircraft as was the Engine replaced thereof. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Conveyance of Replacement Airframe. Prior to or at the time of any conveyance of a replacement Airframe pursuant to Section 11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the following documents which shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect on said date: (i) a full warranty bill of sale, in form and substance satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be approved by the FAA on said date), executed by the owner thereof, in favor of Lessor and, cause supplements, reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), to this Lease, the Indenture (if then in effect) and the Trust Agreement (if then in effect), with respect to such replacement Airframe and to be duly filed for recordation pursuant to the Federal Aviation Act or other applicable Governmental Entity; (ii) the certificate specified in Section 12(f) hereof demonstrating compliance with the insurance requirements of Section 12 with respect to the replacement Airframe and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such other evidence of title as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request) to the effect that, upon such conveyance, Lessor will acquire good title to such replacement Airframe free and clear of all Liens (it being understood that, upon such conveyance, such replacement Airframe may be subject to Permitted Liens), that such replacement Airframe will be leased hereunder to the same extent as the Airframe replaced thereby and will be subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant -70- 72 Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and Replacement Engine and the Lien of the Indenture on such Replacement Airframe and Replacement Engine; and that Lessor, and Indenture Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement airframe and engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement; (iv) a certificate signed by a Responsible Officer of Lessee certifying that, upon consummation of such replacement, no Default or Event of Default will exist hereunder; (v) such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(c), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(c), in each case in form and substance satisfactory to each such party, including evidence that the Aircraft of which the replacement Airframe is a part has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of this Lease and application for registration of such replacement Airframe in the name of Lessor has been duly made with the FAA or other applicable Governmental Entity and Lessee has temporary or permanent authority to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code financing statements covering the replacement Airframe as may be reasonably requested by Lessor or Indenture Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal prepared in accordance with the Appraisal Procedure which confirms that the replacement Airframe and any replacement Engine has a value, utility and remaining useful life at least equal to that of the Airframe and Engines which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of this Lease whether or not they are in fact so maintained; and (ix) furnish Owner Trustee and -71- 73 Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Airframe is free and clear of Lessor's Liens), all of Lessor's right, title and interest in and to the Aircraft which suffered the Event of Loss. No Event of Loss with respect to the Aircraft under the circumstances contemplated by the terms of this Section 11(c) shall result in any reduction in Rent. For all purposes of this Lease, each such replacement Aircraft (together with any Engines constituting part of the Aircraft being replaced as to which an Event of Loss has not occurred) shall be deemed part of the property leased hereunder and shall be deemed the "Aircraft" as defined herein. (d) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer (including a Governmental Entity providing an indemnity in lieu thereof) with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(f) below, any payments (other than insurance or such indemnity proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and other payments, if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section -72- 74 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (e) Requisition for Use by Government with Respect to the Aircraft. Subject to Section 11(f) below, in the event of the requisition for use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other than a requisition constituting an Event of Loss), Lessee shall promptly notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) thereof and all of Lessee's obligations under this Lease with respect to such Airframe or Engine shall continue to the same extent as if such requisition had not occurred. All payments received by Lessor or Lessee from the Governmental Entity for the use of such Airframe or Engine during the Term shall be paid over to, or retained by, Lessee if no Default or Event of Default shall have occurred and be continuing; and all other payments received by Lessor or Lessee from the Governmental Entity shall be paid over to, or retained by, Lessor. If the Airframe and such Engines or engines are not returned by the end of the Term, an Event of Loss shall be deemed to have occurred on the last day of the Term and, on the last day of the Term, Lessee shall either pay to Lessor the amount provided herein for an Event of Loss to the Airframe and such Engines or engines on such date or provide a replacement Aircraft and Engine on such date in the condition provided for in Section 16 and Exhibit E. In the event of the requisition for use by the Governmental Entity of any Engine without the requisition for use of the Airframe, Lessee will replace such Engine hereunder by complying with the terms of Section 11(b) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (f) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been -73- 75 discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability products, completed operation liability covering maintenance of aircraft, but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Aircraft, in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured or additional insured by any act or omission of Lessee or any other insured or additional insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, -74- 76 regardless as to any insured or additional insured of any breach or violation by Lessee or any other insured or additional insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage), after notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft is located or operated, and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee, or the other Indemnitees, or their respective permitted assigns, with respect to the Aircraft. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers -75- 77 "all-risk" ground and flight aircraft hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the consent of Lessee) covering the Aircraft, and "all-risk" coverage including transit insurance with respect to Engines and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull insurance reasonably acceptable to Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly-sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged; provided that Indenture Trustee shall not be obligated to request such insurance and shall not be liable for any failure to request such insurance. Anything herein to the contrary notwithstanding, at all times while the Aircraft is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Aircraft. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Aircraft, shall designate, so long as the Lien of the -76- 78 Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Aircraft, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in -77- 79 a payment, such payment shall be payable directly to Indenture Trustee, as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has -78- 80 not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and any other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Airframe or an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). -79- 81 (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Aircraft and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Aircraft complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other -80- 82 such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris if the relevant primary insurer shall have obtained reinsurance and such reinsurance (i) is on the same terms as the original insurance and includes the provisions required by this Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contains a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar size passenger aircraft that comprise Lessee's fleet in similar -81- 83 storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for passenger aircraft of similar size as the Aircraft in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on a net after-tax -82- 84 basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims (whether or not based on strict liability), damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, costs and expenses set forth in Section 21(j) hereof and reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee, from (and including) the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Aircraft to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations thereunder or to file the documentation necessary to continue FAA registration of the Aircraft), delivery, nondelivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' -83- 85 Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any engine used in connection with the Airframe or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such defect shall be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) as to such Indemnitee, an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the -84- 86 Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder or thereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Aircraft, the Airframe, any Engine or any engine used in connection with the Airframe or any Part thereof, either in the air or on the ground, or which may be caused by any defect in such Aircraft, Airframe, Engine, -85- 87 engine or Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in the possession of Lessee, and regardless of the location of such Aircraft at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents (except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition), (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative -86- 88 Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee has the right to control the defense thereof is materially prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section. -87- 89 Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Aircraft or of the residual value of the Aircraft. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease or any of the other Operative Documents and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) -88- 90 or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor, cause any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture -89- 91 and in the Aircraft, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease, and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee other -90- 92 than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Aircraft or Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Section 16. Return of Aircraft and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Aircraft to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree, fully equipped with all required Engines, or other engines owned by Lessee (which shall thereupon become Engines as hereinafter provided) meeting the conditions specified in this Section and Exhibit E, duly installed thereon by delivering the same to the Lessor at such location. Lessee shall comply with Section 11(b) and this Section 16 with respect to any engines installed on the Aircraft returned to Lessor hereunder and meeting the conditions described herein which were not originally installed on the Aircraft. (b) Status Upon Return. Upon any Return Occasion hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act and with a current and valid Airworthiness Certificate installed on the Aircraft, unless such certificate shall have been suspended or revoked as a result of the suspension or revocation of the registration of the Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft to be registered in the name of Lessor under the Federal Aviation Act (whether by means of a voting trust agreement or otherwise) in which case the Aircraft shall nevertheless meet all conditions for such certification and for the issuance of such certificate; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Aircraft to be operated under, and in full compliance with, such Airworthiness Certificate and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as -91- 93 may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense with respect to effecting such registration, duly registered in the name of the Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vii) in good and airworthy operating condition, and in the same condition (including, without limitation, in a passenger configuration suitable for passenger revenue service) as when delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (viii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Engines. In the event any engine not owned by Lessor shall be installed on the Aircraft on any Return Occasion, without limiting Lessee's obligations under the Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engines or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on the Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engines, assuming the Engines were in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and -92- 94 interest in and to any Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens. (d) Records and Documents. Upon the return of the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Aircraft, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Aircraft and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Aircraft under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Aircraft under the Maintenance Program, in each case as Lessor may reasonably request, and all documentation with respect to the Aircraft set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Aircraft on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Aircraft, Airframe, Engines, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, -93- 95 accumulated cycles or flight hours as applicable and remaining service lives on a separate listing. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an aircraft which has been operating in regulated commercial air service, shall be delivered to Lessor with the Aircraft. Any documents or records required to be delivered hereunder shall be in English. (e) Condition of Aircraft. Upon any Return Occasion, Lessee shall return such Aircraft to Lessor in such condition that the Aircraft shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Aircraft available to Lessor at the location where the "block 'C' Check" (or equivalent level designated check or checks) required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding compensation to representatives of Lessor), in order to verify that the condition of such Aircraft complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such "block 'C' Check" (or equivalent level check or checks) and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such "block 'C' Check" is being performed and shall have such duration as to permit the opening of any areas of the Aircraft which are necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Aircraft and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(g) -94- 96 hereof, the Term with respect to the Aircraft undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations hereunder continued, on a daily basis until the Final Inspection shall have been concluded and Lessee shall pay Rent during any such extension in an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value during such extension shall equal the Stipulated Loss Value on the last day of the Basic Term or Renewal Term, as the case may be); provided, however, that Lessee shall not be required to pay Rent with respect to the Aircraft during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Aircraft Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where -95- 97 the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Aircraft. (h) Corrections and Subsequent Corrections. To the extent that the Aircraft or any Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as such Aircraft is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of such Aircraft and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of such Aircraft, at commercial rates then charged by the Person selected by Lessor to perform such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. Nothing set forth in this paragraph shall constitute a limitation on Lessor's or Owner Participant's ability to recover from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the return of the Aircraft at the time, in the place and in the condition as specified in this Section 16 and Exhibit E hereto. (i) Functional Flight Check. Immediately prior to the expiration of the Term, Lessor will be permitted to conduct a non-commercial functional flight check flight of no more than two (2) hours duration in accordance with the Manufacturer's functional flight check procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft and proper functioning of all systems and components. A qualified pilot and up to five (5) other representatives selected by Lessor may take part in such flight to verify compliance of the Aircraft with the requirements of this Lease, provided, that Lessor shall be responsible for the charges of such qualified pilot and representatives. Lessee may combine the functional flight check provided in this Section 16(i) with the delivery flight specified in Section 16(a) and such functional flight check shall include the landing. Any discrepancy or -96- 98 malfunction detected during any functional flight check (including a functional flight check combined with a delivery flight) shall be corrected, at Lessee's expense, and prior to the expiration of the Term. To the extent that any actions to correct any such discrepancy or malfunction extend beyond the Term, the provisions of the first sentence of Section 16(h) shall apply. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee. (j) Export Certificate of Airworthiness. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably request to assist Lessor in obtaining any required documents in relation to the export of the Aircraft from the United States (including, without limitation, a valid and subsisting export certificate of airworthiness with respect to the Aircraft and export license) and in relation to the deregistration of the Aircraft. (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Aircraft which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Aircraft for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Aircraft after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Aircraft and the records relating thereto to the extent it does not -97- 99 unreasonably interfere with the operation or maintenance of the Aircraft or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the date on which such payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto; provided that any failure of Lessee to pay to Lessor or the Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless Lessor or Owner Participant delivers notice to Lessee; or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Aircraft outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Aircraft; or (c) Any representation or warranty made by Lessee herein or in the Refunding Agreement or in any certificate furnished by Lessee in connection herewith or therewith is or was incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or the Refunding Agreement, and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, -98- 100 that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c) or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect) is filed and -99- 101 is not withdrawn or dismissed within ninety (90) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of ninety (90) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to all or any part of the Airframe and any or all of the Engines as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's cost and expense, immediately return, and the Lessee hereby agrees that it shall return promptly all or such part of, the Aircraft to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of -100- 102 complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Aircraft) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Aircraft or any Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if such Aircraft were being returned at the end of the Term hereof with respect to such Aircraft. In addition, Lessor or Lessor's agent, at its option and to the extent permitted by applicable Law, may but shall not be obligated to enter upon the premises where all or any part of the Aircraft, Airframe and/or Engines are located to take immediate possession of and, at Lessor's option, remove the same (and/or any engine which is not an Engine but which is installed on the Airframe, subject to the rights of the owner, lessor or secured party thereof) by summary proceedings or otherwise, all without liability accruing to Lessor or Lessor's agent for or by reason of such entry or taking of possession or removal whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. (b) With or without taking possession thereof, sell or cause to be sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Aircraft to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the -101- 103 following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Aircraft for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, Airframe or Engine or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent due to and including the date of sale, plus the amount by which the Stipulated Loss Value of such Aircraft, Airframe or Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In lieu of exercising its rights under paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in advance for the period on and after the Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such Aircraft due and unpaid for any period prior to and including, and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss Value for the Aircraft computed as of such Stipulated Loss Value Date; and upon such payment of liquidated damages and the payment of all other Rent then due hereunder and the discharge of the Lien of the Indenture -102- 104 pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without recourse or warranty (except as to the absence of Lessor's Liens and the Lien of the Indenture), all right, title and interest of Lessor in and to the Aircraft to Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and deliver such documents evidencing such transfer and take such further action as Lessee shall reasonably request. (f) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the Aircraft, Airframe or Engine under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, Airframe or Engine, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Aircraft which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for such Aircraft, Airframe or Engine would have expired but for Lessee's default, discounted periodically (equal to installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (g) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. (h) Lessor may exercise any other right or remedy which may be available to it under applicable laws, or may proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. -103- 105 In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above, until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Aircraft, Airframe or Engine in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's property in repossessing and holding the Aircraft, the Airframe, an Engine or Part except for direct damages caused by Lessor's gross negligence or willful misconduct and (iv) shall have the right to maintain possession of and dispose of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Aircraft, the Airframe, an Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or -104- 106 repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Aircraft, the Airframe, an Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Aircraft, the Airframe, an Engine or Part pursuant to this Section, Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d), (e) or (f) above. -105- 107 Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Aircraft leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Aircraft, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. The provisions of this Section 18 shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. Section 19. Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and perfected security interest in all of Lessor's right, title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee hereby consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) (other than Expected Rights) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture -106- 108 Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. Section 20. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Aircraft for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no -107- 109 earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, in no event less than the greater of 120% of the "fair market sales value" of the Aircraft as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, each of Lessor and Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft or any Engine or Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file -108- 110 a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Aircraft for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (B) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices and instructions between Lessor and Lessee required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). All notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee (until such time as the Lien of the Indenture is discharged) and to Owner Participant, at such address as Owner Participant and Indenture Trustee, respectively, may designate from time to time. All notices and instructions hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. -109- 111 (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Aircraft hereunder, and all rents, revenues, profits and income therefrom, in accordance with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it, provided that Lessor and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through Trustee, Note Holder or any other Person lawfully claiming by or through them, and provided further, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more -110- 112 frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications hereof or thereof, or waivers or consents hereunder or thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the Financing Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or -111- 113 substituted statute confers upon owners and lessors of aircraft similarly situated to Lessor. (l) U.S. Registration Number. At Lessee's request, Lessor shall use its best efforts to have the Aircraft registered under the United States Registration Number designated by Lessee. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United States District Court for the Southern District of New York. Each of Lessee and Lessor represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee or Lessor hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, it hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Each of Lessee and Lessor hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee or Lessor as from time to time may be designated by Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns (as applicable). Final (after all appeals) judgment (the enforcement of which has not been -112- 114 stayed) against either Lessee or Lessor obtained in any suit originally brought in the court of the State of New York in New York County or in the United States District of New York shall be conclusive, and, to the extent permitted by applicable Law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings, against Lessee or Lessor, as the case may be, or any of their assets in the courts of any country or place where such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this -113- 115 Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all purposes hereof without the necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease, as amended and restated by this Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] (and as otherwise extended, amended, modified, renewed or supplemented), shall be governed by Article 2-A of the Uniform Commercial Code of New York. -114- 116 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by its duly authorized officer as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:__________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:___________________________ Title: -115- 117 TABLE OF CONTENTS Page ---- Section 1. Definitions..................................................... 1 Section 2. Agreement to Lease.............................................. 21 Section 3. Delivery and Acceptance; Term................................... 22 (a) Time of Delivery...................................... 22 (b) ...................................................... 22 [Intentionally Left Blank] (c) Acceptance of Aircraft................................ 22 (d) Term of Lease......................................... 22 Section 4. Rent............................................................ 22 (a) Rent.................................................. 22 (b) Minimum Payments...................................... 23 (c) Date, Place and Method of Payment..................... 23 (d) Prohibition Against Setoff, Counterclaim, Etc..................................... 24 Section 5. Representations, Warranties and Covenants....................... 26 (a) Warranties and Disclaimer of Warranties............... 26 (b) Representations and Warranties of Lessor................................................ 27 (c) No Amendments to Financing Documents.................. 27 (d) Suppliers' Warranties................................. 27 Section 6. Possession and Use.............................................. 28 (a) Possession............................................ 28 (b) Reciprocal Recognition of Rights...................... 35 (c) Lawful Insured Operations............................. 36 (d) Maintenance........................................... 37 (e) Registration and Insignia............................. 38 Section 7. Inspection...................................................... 39 Section 8. Additional Covenants of Lessee.................................. 40 (a) Financial Information................................. 40 (b) Maintenance of Corporate Existence.................... 42 (c) Maintenance of Status................................. 42 (d) Payment of Taxes...................................... 42 (e) Consolidation, Merger, Etc............................ 42 (f) Information........................................... 43 (g) Place of Business..................................... 44 (h) Certain Limitations on Use............................ 44 (i) Section 1110.......................................... 45 (j) Permits and Licenses.................................. 45 (k) Security Opinion; Annual Certificate.................. 45 (l) Letter of Credit...................................... 46 i 118 Page Section 9. Replacement of Parts; Alterations, Modifications and Additions........................... 49 (a) Replacement of Parts.................................. 49 (b) Alterations, Modifications and Additions............................................. 50 (c) Pooling............................................... 52 Section 10. General Tax Indemnity.......................................... 53 (a) Indemnity............................................. 53 (b) Exclusions............................................ 55 (c) Covered Income Tax.................................... 57 (d) Reports and Returns................................... 59 (e) After-Tax Basis....................................... 59 (f) Tax Benefit........................................... 60 (g) Payment............................................... 60 (h) Contest............................................... 61 (i) Refund................................................ 63 (j) Diligence............................................. 63 (k) Affiliated Group...................................... 63 (l) Verification.......................................... 64 (m) Survival.............................................. 64 Section 11. Loss, Damage and Requisition................................... 64 (a) Event of Loss with Respect to the Airframe.............................................. 64 (b) Event of Loss with Respect to an Engine............... 67 (c) Conveyance of Replacement Airframe.................... 68 (d) Application of Proceeds and Payments.................. 70 (e) Requisition for Use by Government with Respect to the Aircraft............................... 71 (f) Application in Default................................ 72 Section 12. Insurance...................................................... 72 (a) Public Liability and Property Damage Insurance. ........................................... 72 (b) Insurance Against Loss or Damage...................... 74 (c) Application of Insurance Proceeds for an Event of Loss...................................... 77 (d) Application of Insurance Proceeds for Other than an Event of Loss........................... 77 (e) Application in Default................................ 78 (f) Certificates.......................................... 78 (g) Reinsurance........................................... 79 (h) Storage............................................... 80 (i) Amounts Held.......................................... 80 (j) After the Term........................................ 80 (k) Governmental Indemnity................................ 80 Section 13. General Indemnity.............................................. 81 ii 119 Page Section 14. Liens.......................................................... 86 Section 15. Protection of Title and Further Assurances............................................ 87 Section 16. Return of Aircraft and Records................................. 89 (a) Return................................................ 89 (b) Status Upon Return.................................... 90 (c) Engines............................................... 91 (d) Records and Documents................................. 91 (e) Condition of Aircraft................................. 92 (f) Final Inspection...................................... 93 (g) Aircraft Records and Documents........................ 94 (h) Corrections and Subsequent Corrections................ 94 (i) Functional Flight Check............................... 94 (j) Export Certificate of Airworthiness................... 95 (k) Service Bulletin and Modification Kits................ 95 (l) Storage Upon Return................................... 95 (m) Resale/Release Cooperation............................ 96 Section 17. Events of Default.............................................. 96 Section 18. Remedies....................................................... 98 Section 19. Security for Obligations.............................. 104 Section 20. Renewal Option................................................. 106 Section 21. Miscellaneous.................................................. 107 (a) Severability, Amendment, and Construction.......................................... 107 (b) GOVERNING LAW......................................... 107 (c) Notices............................................... 108 (d) Lessor's Right to Perform for Lessee.................. 108 (e) Counterparts.......................................... 108 (f) Quiet Enjoyment....................................... 108 (g) Brokers............................................... 109 (h) Investment of Funds................................... 109 (i) Entire Agreement; Amendment........................... 110 (j) Expenses.............................................. 110 (k) Federal Bankruptcy Code............................... 110 (l) U.S. Registration Number.............................. 110 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial...................... 110 (n) Limitation on Recourse................................ 112 (o) Successor Trustee..................................... 113 (p) Article 2-A of the UCC................................ 113 iii 120 ANNEXES Annex I - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Aircraft Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 3 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Assignment of Permitted Sublessee iv EX-4.30 31 RESTATED ENGINE LEASE AGREEMENT[GPA 1991 AWA-E1] 1 EXHIBIT 4.30 AMENDED AND RESTATED ENGINE LEASE AGREEMENT THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT dated as of March 15, 1991 and amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company", and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as 2 defined in the Pass Through Trust Agreement); and the term "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or elect or cause the direction or election of the management and policies of a Person whether by contract or otherwise. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that the Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that the Engine or such Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that the Engine or such Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Engine as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section 18 in which case only Lessor shall select such appraiser (which -2- 3 appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of the Engine or such Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of the Engine or such Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of the Engine or such Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Engine shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Engine pursuant to Section 4(a)(i). "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment -3- 4 due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 2. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. -4- 5 "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean March 27, 1991 being the date the Engine was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) the IAE Model V2500-A1 engine listed by manufacturer's serial number in Lease Supplement No. 1, (ii) Parts or components thereof, (iii) ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Engine Records and Documents and all other manuals and records with respect to such Engine, and (v) all substitutions, replacements and renewals of any and all thereof, including but not limited to, any replacement engine which may from time to time be substituted, pursuant to Section 6(a) or 11(a), for the Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. "Engine Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Engine: (a) loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days, but in no event later than the last day of the Term; -5- 6 (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any law, rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of the Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing beyond the last day of the Term; or (h) as otherwise provided herein. "Expiration Date" shall mean the date specified in Lease Supplement No. 2, on which date the Basic Term of this Lease shall expire. -6- 7 "FAA" shall mean the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Federal Aviation Act" shall mean the sections of title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass Through Trust Agreement and each supplement thereto and any certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Engine by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Engine by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. -7- 8 "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the Engine or its operations. "GPA Aircraft" shall mean any aircraft which is the subject of any of the Other Leases. "Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture) and each Pass Through Trust, each Pass Through Trustee (in its individual capacity and as trustee under the Pass Through Trusts), the Subordination Agent and each Liquidity Provider, their respective successors and permitted assigns and (and, in the case of a permitted assign of Owner Participant that is a partnership, the partners of such partnership), and any combination thereof and their respective officers, directors, agents, servants, employees, subsidiaries, Affiliates and shareholders. "Indenture" shall mean the Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, and amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. -8- 9 "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture computed on the basis of a 360-day year and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1 and Lease Supplement No. 2 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1991 AWA-E1] No. 1 dated March 27, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1991 AWA-E1] No. 2, substantially in the -9- 10 form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Engine hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Engine or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) not related to its interest in the Engine or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been -10- 11 granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Engine, the Trust Estate, the Operative Documents or the Financing Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except Liens resulting from a transfer not permitted by such Section ) or 20 of this Lease or pursuant to Section 10 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Engine or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft which is applicable to IAE AG V2500 Engines in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Engine is subject to a Permitted Sublease to a Foreign Air Carrier any other FAA approved maintenance program for the Engine which is approved by the aviation authority of the country of -11- 12 registry and complies with the requirements applicable to maintenance of the Engine contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Engine, including, but not limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean IAE in its capacity as manufacturer of the Engine, together with any subcontractor or supplier thereof. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, any sublease, the Tax Indemnification Agreement, the Financing Documents, that certain letter dated as of the Restatement Date and any certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Engine Lease Agreement [GPA 1991 AWA-E1], with respect to the Aircraft, dated as of March 15, 1991, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification -12- 13 Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, and amended and restated as of the Restatement Date between the Original Head Lessee and Owner Participant, as amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA I, Inc., a Connecticut corporation. "Original Sublease" shall mean the Initial Sublease (as defined in the Original Head Lease) as in effect immediately prior to the Restatement Date. "Other Leases" shall mean the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, each as amended, supplemented or otherwise modified from time to time. "Other Letters of Credit" shall mean any and all letters of credit pursuant to Section 8(l) of the Other Leases. "Owner Participant" shall mean _____________ ___________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. -13- 14 "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Participation Agreement" shall mean the Participation Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named therein, as amended by the Letter Agreement dated as of July 29, 1993, as the same may be further amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, -14- 15 joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Engine Sale Agreement dated as of September 28, 1990, among IAE and Original Head Lessee, as the same may be amended, supplemented or otherwise modified to the extent permitted by the terms thereof from time to time. "Purchase Documents" shall mean the Purchase Agreement and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Renewal Rent Payment Date shall be made on the next succeeding Business Day. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Engine" shall have the meanings specified in accordance with its description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. -15- 16 "Return Occasion" shall mean the event that occurs when possession of the Engine is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Shipping Stand" shall mean the cradle designed to hold an engine which has a suitable shock mounting system to allow the engine to be transported by truck or other vehicle without damage, listed by part number and manufacturer's serial number in Lease Supplement No. 1. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from the Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20(ii) (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than -16- 17 a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Engine. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth, on Exhibit A hereto. "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of (a) an incipient Event of Loss and the operation of Section 11 hereof or (b) the need to correct any failure of the Engine to satisfy the requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this definition of "Supplemental Rent", not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Pro Rata Share" means as of any date of determination a fraction the numerator of which -17- 18 is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "equipment notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-E1], dated as of December 12, 1990, and as amended and restated as of November 26, 1996, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Taxing Authority" shall have the meaning specified in Section 10(a). "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 2 and the Renewal Term, if Lessee extends the Term in accordance with Section 20, in either case, as extended or deemed extended as a result of the occurrence of an event described in clause (iii) to the definition of "Supplemental Rent" in this Lease, for which the Engine is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991 as amended by Trust Supplement No. 1, and as further amended by Trust Supplement No. 2, between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include each Trust Supplement. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1 and Trust Supplement No. 2 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. -18- 19 "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1991 AWA-E1] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1991 AWA-E1] No. 2 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Engine to a third party pursuant to which such Engine (i) shall be operated solely by regular employees of Lessee possessing all current certificates and licenses required under the Federal Aviation Act (it is understood that cabin attendants need not be regular employees of Lessee) and Lessee otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee in accordance with its normal maintenance practices and this Lease to which the Engine is subject, and otherwise the insurance required hereunder shall be maintained and the Engine shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Engine to Lessee, and Lessee hereby agrees to lease the Engine from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term. (a) Time of Delivery. The Engine was delivered to Lessee, and Lessee accepted delivery of the Engine, on March 27, 1991. (b) [Intentionally Left Blank.] (c) Acceptance of Engine. The Engine leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Engine for all purposes of this Lease and Lessee's -19- 20 acceptance of the Engine was conclusive evidence that, as between Lessor and Lessee, the Engine was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. Section 4. Rent. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in arrears as set forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable ten (10) Business Days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic or Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to the terms hereof shall survive the expiration or termination of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by -20- 21 reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in the City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except for all Excepted Payments. All Excepted Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Engine, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without -21- 22 limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Engine (subject to the provisions of Section 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Engine or any other Person; (iii) any Liens with respect to the Engine; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any sublease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Engine or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay, to Indenture Trustee or -22- 23 Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE ENGINE WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE ENGINE ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE ENGINE UNDER THIS LEASE OR BY HAVING ACQUIRED THE ENGINE OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE ENGINE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE ENGINE, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE ENGINE, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR -23- 24 DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE ENGINE) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE ENGINE OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE ENGINE OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE ENGINE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a)(i) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE ENGINE, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that, (x) on the Delivery Date, Lessor had, and on the Restatement Date Lessor has, the right to lease the Engine hereunder and (y) on the Delivery Date the Engine was free of Head Lessor's Liens and on the Restatement Date the Engine is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume or suffer to exist any Lessor's Lien on the Engine. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. -24- 25 The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of this Lease and the delivery of the Engine and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Engine continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or propulsion system performance guaranty, of the Manufacturer or Manufacturer's subsidiary, if any, or any subcontractor or vendor with respect thereto under the Purchase Documents (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Engine), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF -25- 26 THE ENGINE; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Engine or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject the Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that Lessor has been given an opportunity to review the interchange, maintenance, servicing, pooling or similar arrangement, including but not limited to all agreements and other documents relating thereto and has consented, which consent shall not be unreasonably withheld, to the placement of the Engine into such interchange, maintenance, servicing, pooling or similar arrangement and provided, further that (A) no transfer of the registration of the Engine shall be effected in connection therewith and (B) (i) no such agreement or arrangement contemplates, results in or requires the transfer of title to the Engine, and (ii) if Lessor's title to the Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to the Engine and not an Event of Default and Lessee shall comply with Section 11(a) hereof in respect thereof; (2) deliver possession of the Engine to the Manufacturer, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on the Engine or any part thereof or for alterations or modifications in or additions to the Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Engine to the United States of America or any instrumentality or agency thereof pursuant to a sublease; -26- 27 (4) (i) subject the Engine to the Civil Reserve Air Fleet Program and transfer possession of the Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; (ii) subject the Engine to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install the Engine on an airframe owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engine), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or the engine installed thereon; (6) install the Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that the Engine leased to Lessee hereby shall not become subject to the Lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of the Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the owner of the Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written -27- 28 agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in the Engine by reason of the Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install the Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to the Engine and Lessee shall comply with Section 11(a) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in the Engine under applicable Law until compliance by Lessee with such Section 11; (8) enter into a Wet Lease for the aircraft on which the Engine is installed in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee shall enter into any Wet Lease for a period of more than six months (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given at least ten (10) Business Days prior to entering into such Wet Lease); or (9) sublease the Engine to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section 6(a) hereof (other than the transfer of the Engine which is deemed to have been an Event of Loss) and any Wet Lease shall be expressly subject and -28- 29 subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of the Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable; (6) The sublessee under any Permitted Sublease, in its consent thereto, shall confirm that from and after the occurrence and continuance of an Event of Default and, unless an Event of Default specified in Section 17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease being deemed or declared in default, Lessor (and, so long as the Lien of the Indenture shall not have been discharged, Indenture Trustee) shall be entitled to enforce directly and in its own name all representations, -29- 30 warranties, indemnities, covenants and agreements under the applicable Permitted Sublease; and (7) Each Permitted Sublease shall (A) provide that (I) the Engine may not be operated or used other than as provided in this Lease and shall be maintained and operated as required hereunder, (II) Lessor may avoid or terminate such sublease following an Event of Default hereunder and (III) to the extent not accomplished by an assignment of the Permitted Sublease, upon the occurrence of an Event of Default hereunder, Lessee's rights under such Permitted Sublease shall automatically be deemed assigned to Lessor; and (B) be a "net lease" in accordance with industry practice and shall be comparable to, or more restrictive than, this Lease and under such Permitted Sublease (except a sublease to the United States Government or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor under such Permitted Sublease, must be entitled to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted Sublease shall contain provisions regarding such Section 1110 which are substantially the same as the related provisions of this Lease. In addition, from and after the occurrence and continuance of an Event of Default, all rent and other amounts payable by the Permitted Sublessee under such Permitted Sublease shall be paid directly to Indenture Trustee and, upon discharge of the Lien of the Indenture, to Lessor. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Engine or the aircraft on which the Engine is installed to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains -30- 31 diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Engine in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Engine by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Engine in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Engine, to the registry of the Engine in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall -31- 32 be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. Any Permitted Sublease shall expressly provide that the rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under the other Operative Documents or constitute a waiver of Lessor's rights or remedies hereunder or under the other Operative Documents, and such rights shall continue as if such Permitted Sublease had not occurred. Any Permitted Sublease shall expressly prohibit any further sub-sublease or assignment or any other similar transfer of the Engine or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease together with an assignment, as security for Lessee's obligations hereunder, of such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days following the effective date of such Permitted Sublease. (b) [Intentionally Left Blank] (c) Lawful Insured Operations. Lessee will not permit the Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, any -32- 33 manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the aircraft on which the Engine is installed is registered with the FAA, or the applicable laws of any other jurisdiction in which the aircraft on which the Engine is installed may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Engine or impair the interest of Lessor therein or impair the validity or priority of the Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Engine during the Basic Term or then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Engine, or suffer or permit the Engine to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Engine is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Engine or suffer or permit the Engine to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to -33- 34 substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, any other applicable rules, regulations and requirements by any other applicable Governmental Entity, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Engine, as shall be the case with respect to similar engines owned by Lessee without discrimination and as if Lessee owned the Engine and was going to use the Engine in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Engine, as shall be the case with respect to similar engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Engine and was going to use the Engine in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Engine shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by the central civil aviation authority of the country of registry, and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Engine in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Engine or cause the Engine to be kept in such condition as is necessary to maintain in good standing the airworthiness of such Engine at all times under the Federal Aviation Act and any other applicable law or the applicable laws of any other jurisdiction in which the Engine may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided -34- 35 under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the interests of Lessor and Indenture Trustee with respect to the Engine at all times, at its expense, to be duly recorded under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Engine and this Lease at all times. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") on the Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, within five (5) Business Days of delivery of the Engine, Lessee shall fasten or cause to be fastened on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Engine to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Engine as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause any sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee -35- 36 on reasonable prior notice at reasonable times to visit, inspect and survey the Engine, its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as no Default or Event of Default has occurred hereunder inspections shall be endeavored to be performed during regularly scheduled maintenance checks of the Engine. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Engine. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's -36- 37 Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Engine, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) within fifteen (15) days following the end of each calendar month throughout the Term, an Engine status report, substantially in the form of Exhibit K hereto, including, without limitation, (A) a summation of hours and cycles accumulated on the Engine by individual serial number during such preceding calendar month and (B) the identity of the airframe (including the "N" number and, at Lessor's request, ownership and lien interests in respect thereof) on which the Engine was installed as of the end of each such calendar month, and, if Lessor so requests, the location of any such airframe. The foregoing shall not be deemed to require reports regarding hours or cycles on any Parts; (vi) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by -37- 38 such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vii) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Engine (or any Part) with a repair or replacement cost (including labor charges) in excess of $1,000,000; (viii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (ix) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. -38- 39 (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets (in one or a series of transactions) to any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the Laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. -39- 40 No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Engine as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its Federal and state income tax returns (or to permit the filing of the Federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Engine. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Engine only in commercial passenger operations and related cargo operations. Unless the Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Engine or permit the Engine to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Engine for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the Maximum Foreign Use Percentage. Unless Owner Participant otherwise agrees, prior to permitting the Engine to be operated in any member state of the European Union or other European country, Lessee shall -40- 41 deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all engines (including, without limitation, the Engine) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] unless it had available to it the benefits of a lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Engine under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Engine hereunder. The acknowledgement, covenant and agreement contained in this Section 8(i) shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Engine or any Part or the execution, delivery or performance of this Lease or the enforcement thereof against Lessee. (k) Security Opinion; Annual Certificate. (i) During such times that the Engine is recorded under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel -41- 42 rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, rerecording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto, (ii) UCC financing statements and (iii) such other appropriate documents, as is necessary to maintain the perfection of Lessor's title to and/or interest in and Indenture Trustee's security interest in the Engine and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions or no action is necessary to maintain the perfection of such title and/or security interest; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Engine is recorded under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of -42- 43 Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Engine and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (l) Letter of Credit. As security for the obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default has occurred, which amount may be applied, retained or utilized as provided in the penultimate paragraph of this Section 8(l); (ii) be maintained in full force and effect at all times until ninety-one (91) days after the Expiration Date with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that the Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long term unsecured debt rating at least equal to its rating on the date hereof; (iii) be expressly designated as transferrable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term or the Lessor is holding proceeds of the Letter of Credit that were retained and not applied as provided herein, then Lessor shall return the Letter of Credit to Lessee or terminate it, and/or return any retained or unapplied proceeds, ninety-one (91) days following the date of such expiration or other termination of this Lease so long as no Default or Event of -43- 44 Default has occurred or is continuing hereunder or under any Other Lease, upon payment in full of all amounts then due and owing to Owner Trustee and Owner Participant under the Operative Documents. If an Event of Default has occurred or is continuing under this Lease or an Event of Default has occurred or is continuing under any Other Lease (as therein defined), in addition to any other rights and remedies Lessor may have hereunder, under any Other Lease, any sublease and any and all other remedies available at Law (including, without limitation, the Uniform Commercial Code as adopted in New York) or equity and upon exercising its rights under the Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to (i) hold any amounts drawn under the Letter of Credit or Other Letters of Credit as security for Lessee's obligations under this Lease or, the Other Leases, (ii) retain any amounts drawn under the Letter of Credit or Other Letters of Credit for its own account and apply (including, without limitation, by way of set off against) such drawn amounts, as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease and the Other Leases) to remedy any breach by Lessee of this Lease or any other Operative Documents or Other Leases or (iii) recompense Lessor, Owner Participant or any of their respective Affiliates for any loss, damage, cost or expense or other Claim due or owing hereunder or under the Other Leases; provided, however, that in the case of any drawing in respect of any claim for payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts which would (absent such Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders); provided further, however, that neither the amount so applied at any one time nor the aggregate amount so applied at different times shall reduce the amount of any installment or payment of Rent (whether upon the termination of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in full the amounts required to be paid on account of the principal of and any interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or credit with respect to any amounts so applied. Any amount retained shall be considered the property of Lessor and Lessor may commingle such amount with its general funds and Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum extent permitted by applicable Law, any interest therein. -44- 45 Lessee shall not be entitled to any interest or other earnings on such retained amount and such amount shall not be refundable. On application of all or any portion of the amounts drawn under the Letter of Credit or any Other Letters of Credit in accordance with this Section 8(l) or the Other Leases, Lessee shall on demand reinstate the amount of the Letter of Credit or Other Letters of Credit, as the case may be, to its or their full Face Amount or provide to Lessor one or more additional Letters of Credit meeting the requirements of this Section 8(l), so that the Letter of Credit and each of the Other Letters of Credit at all times equals the original Face Amount provided for herein. During such times as Lessor shall elect to hold all or part of the proceeds of the Letter of Credit or Other Letters of Credit as security for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee shall not be obligated to reinstate the amount of the Letter of Credit or Letters of Credit, as the case may be, in respect of the proceeds so held. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). -45- 46 All Parts which are at any time removed from the Engine shall remain the property of Lessor, subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Engine and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Engine as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee, free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Engine to the extent made mandatory for Lessee (or a sublessee) in respect of the Engine or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Engine or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Engine and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Engine as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. -46- 47 Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Engine, remove any Part of such Engine, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Engine on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Engine pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Engine without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Engine would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Engine (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Engine to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Engine; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Engine, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not -47- 48 removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Engine in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Engine as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Engine. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Engine, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided that Lessor has been given an opportunity to review the pooling arrangement, including but not limited to all agreements and other documents relating thereto, and has consented, which consent shall not be unreasonably withheld, to the placement of Parts into such pooling arrangement and provided further that the Part replacing such removed Part shall be incorporated or installed in or attached to the Engine in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the -48- 49 Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of and transferring title to Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Engine a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant -49- 50 would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee provided that in any circumstance in which the Lessor is required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, any Engine or any Part thereof or interest therein, or otherwise, with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, by any federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re-registration, deregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or -50- 51 (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any modification or reissuance, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, Taxes imposed on, based on, or measured by, the gross or net income of such Indemnitee or Taxes in lieu thereof (including minimum taxes, withholding taxes and taxes on or measured by any item of tax preference) imposed by the federal government of the United States of America (other than taxes in the nature of sales or use taxes, license taxes, or property taxes), (ii) In the case of any Indemnitee, Taxes imposed on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any state, local or foreign government or taxing authority (other than Taxes in the -51- 52 nature of sales Taxes, use Taxes, license Taxes or property Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which arise out of or are caused by any gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee or any sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (A) an Event of Default and the exercise by any Indemnitee of its remedies under this Lease or the Indenture, as the case may be or (B) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms hereof; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed on a transferee of such Indemnitee of any interest in the Engine or any Part or any interest in the Operative Documents to the extent the amount of any such Taxes exceeds the amount of such Taxes that would have been imposed had there not been any such transfer, unless such transfer results from action by or on behalf of such Indemnitee taken in connection with any Event of Default that has occurred and is continuing or upon the request of the Lessee, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this Section 10(b) or to a failure by Lessee to satisfy its obligations related to such return, -52- 53 (vii) With respect to an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, Taxes which arise out of or are caused by (i) any act or omission or material misrepresentation of any Indemnitee where such act or omission is not permitted by the Financing Documents or the Operative Documents, or (ii) a failure by an Indemnitee to fulfill its contest obligations, and, in the case of the Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a result of a breach of such Indemnitee's representations, warranties, or covenants contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any material respect, or from a failure by such Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Engine, (ix) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust, or (x) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) in the case of an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (other than taxes which are in the nature of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee (A) by any state or local Taxing Authority other than Taxes imposed by any such state or local jurisdiction in which the Indemnitee has its principal place of -53- 54 business or is subject to such Tax as a result of business transactions or other presence unrelated to the transactions contemplated by the Financing Documents or the Operative Documents, unless such Taxes are imposed by such jurisdiction solely as a result of (x) the operation of the Engine in such jurisdiction or (y) the transactions contemplated by the Operative Documents, to the extent such taxes are directly attributable to such operation of the Engine or to such transactions, and (B) by any foreign jurisdiction which are imposed as a result of Lessee's or sublessee's activities in such foreign jurisdiction in connection with the transactions contemplated by the Financing Documents or the Operative Documents, provided, however, a Covered Income Tax also includes the incremental amount of franchise taxes, taxes on doing business, capital stock taxes or taxes on, based on or measured by gross or net income of the original Owner Participant attributable to the Lease (excluding, however, any taxes that would be excluded under any provision other than clauses (i) and (ii) of subsection (b) of this Section 10) which are imposed by the "Home State" of a sublessee (the Home State of a sublessee being the jurisdiction in which such sublessee maintains its principal operations and maintenance center), or in the absence of a Permitted Sublessee, the jurisdiction where the Engine is stored, but only to the extent such incremental taxes result from activities of Lessee or Permitted Sublessee under the Lease in or with respect to the Home State or the jurisdiction where the Engine is stored, and taking into account in calculating such incremental taxes all state tax benefits and savings in the Home State resulting from activities of Lessee or Permitted Sublessee under the Lease, disregarding for such purpose any actual or constructive changes in ownership of the original Owner Participant, provided, however, that Owner Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's liability for indemnity payments attributable to taxes incurred in sublessee's Home State with respect to each Permitted Sublessee; and (ii) in the case of the Indenture Trustee or the Trust Indenture Estate, any Tax based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (including minimum taxes, withholding taxes, and taxes on or measured by any item of tax preference) imposed on such Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or -54- 55 possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to the Owner Participant or Owner Trustee or will notify the Owner Participant or Owner Trustee of such requirement and make such report or return in such manner as shall be reasonably satisfactory to the Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of Taxes imposed on the Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest -55- 56 federal corporate income tax rate applicable to Owner Participant in the year of payment and the highest corporate income tax rate in the jurisdiction in which Owner Participant files a consolidated state income tax return (currently Virginia). (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (ii) the reduction calculated on the same basis as the gross up in Section 10(e) hereof in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (i) above would exceed (A) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (B) the portion of all prior payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are -56- 57 the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. In the event that an Indemnitee receives a written notice of a claim which, if sustained, would require the payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's sole expense, in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in whole or in part separately in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, the Lessee shall not be permitted to contest in the name of such Indemnitee if such contest involves Taxes imposed against such Indemnitee that are unrelated to the transactions contemplated by the Financing Documents or the Operative Documents or Taxes based on or measured by the gross or net income of the Indemnitee, and provided, that if the Indemnitee determines in good faith that there is a material possibility of a material adverse impact upon the Indemnitee with respect to such contest, such Indemnitee may retain or reassert control of any contest that Lessee would otherwise be permitted to contest; provided, further, that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) Lessee shall have (a) furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to -57- 58 Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352) exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), provided however, that in the event the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of tax counsel, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which the Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of statutory changes-in-law, it is as likely as not that the position will prevail, and (b) agreed to pay Indemnitee for all reasonable costs and expenses which Indemnitee may incur in contesting such claim (including without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayment of estimated taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interests), (ii) a threshold amount of $50,000 for any individual claim is at issue, (iii) there is no substantial risk or danger of the sale, loss or forfeiture of the Engine, (iv) Lessee shall have admitted its liability to indemnify Owner Participant for such claim or set forth in writing why it is not so liable, (v) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, the Lessee shall have advanced to such Indemnitee sufficient funds (on an interest free basis) to make such payments, (vi) no claim shall be appealed to the U.S. Supreme Court, (vii) no appeal of a trial court decision shall be undertaken unless Lessee at its sole cost and expense shall have furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that -58- 59 Indemnitee is more likely than not to prevail in such appeal, and (viii) no Event of Default has occurred and is continuing. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released from its responsibility to contest such claim or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include any member of such affiliated group. -59- 60 (l) Verification. At Lessee's request, the amount of any indemnity payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified by an independent public accounting firm selected by such Indemnitee and reasonably satisfactory to Lessee. In order to enable such accountants to verify the indemnity amount, such Indemnitee shall provide to the accountants (for their own confidential use) information reasonably necessary for such verification to which Lessor has access; provided, however, such information shall not be disclosed to Lessee or any person other than such accountants. The fee of such firm shall be payable by Lessee unless such verification shall result in an adjustment in Lessee's favor exceeding 10% of the amount of the indemnity payment. (m) Survival. All of the obligations and rights of Lessee and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the Engines or any Part thereof shall survive the assignment, or expiration or other termination, of the Lease with respect to the Aircraft for a period of six (6) years from the occurrence of such assignment, or expiration or termination, except that such obligations shall survive the expiration of such six (6) year period with respect to any claim asserted prior to the expiration of such six (6) year period but in either case only to the extent such obligation or claim relates to events which occurred or conditions which existed during the Term. Such obligations are expressly undertaken by Lessee for the benefit of, and shall be enforceable by, Lessor. The provisions of this Section 10(m) are subject to the exclusions of Section 10(b)(viii). Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Engine. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Engine, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be -60- 61 continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(b) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Engine, title to a replacement Engine, such replacement Engine (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(b) hereof, at least equal to, and to be in at least as good operating condition as, the Engine (assuming the Engine was maintained in accordance with the requirements of this Agreement, whether or not it is in fact so maintained), and (C) to be another IAE V2500 Engine of like model and equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988 or, at Lessee's option, an IAE engine of an improved model and in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that the Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Engine suffering the Event of Loss. For all purposes hereof, a replacement Engine shall be deemed part of the property leased hereunder and shall be deemed the "Engine" as defined herein. No Event of Loss resulting in replacement of the Engine under this Section 11(a)(i) shall result in any reduction of Rent. In addition to the foregoing, if Lessor so requests, as a condition to any substitution of the Engine under this Lease, Lessee shall use its best efforts to ensure that IAE acknowledges that such substitution shall not affect any product support or other agreements between or among IAE, Parent, Lessor or Lessee. -61- 62 (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss (or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Engine as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last day of the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, in effect on the last day of the Term, for each day from and including the last day of the Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Engine for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Engine due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Engine, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Engine suffering the Event of Loss. (b) Conveyance of Replacement Engine. Upon an Event of Loss with respect to the Engine, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine free of all Liens (it being -62- 63 understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens) and it is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine and that Lessor, and Indenture Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement engine to the same extent as with respect to the Engine prior to such replacement; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon -63- 64 consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged); (viii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer (including a Governmental Entity providing an indemnity in lieu thereof) with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(e) below, any payments (other than insurance or such indemnity proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such -64- 65 Stipulated Loss Value and other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Engine which is being replaced pursuant to Section 11(a)(i) and (b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (b) hereof, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Requisition for Use by Government with Respect to the Engine. Subject to Section 11(e) below, in the event of the requisition for use by a Governmental Entity of the Engine, Lessee will replace such Engine hereunder by complying with the terms of Section 11(a) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (e) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(c) or Section 11(d) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which -65- 66 Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability products, completed operation liability covering maintenance of aircraft, but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Engine and any airframe on which the Engine is installed (for purposes of this Section 12, any such airframe together with the Engine which is installed thereon shall be referred to as, the "Aircraft"), in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and similar type engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured or additional insured by any act or omission of Lessee or any other insured or additional insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured or additional insured of any breach or violation by Lessee or any other insured or additional insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such -66- 67 insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage), after notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Engine is located or operated and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, with respect to the Engine. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other IAE V2500 engines or similar type engines or similar-type aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft and spares hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the -67- 68 consent of Lessee) covering the Engine and/or the Aircraft, as the case may be, and "all-risk" coverage including transit insurance with respect to the Engine and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull and spares insurance reasonably acceptable to Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Engine or the Aircraft to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged; provided that Indenture Trustee shall not be obligated to request such insurance and shall not be liable for any failure to request such insurance. Anything herein to the contrary notwithstanding, at all times while the Engine is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Engine. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft or similar engines owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Engine, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns -68- 69 as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Engine or the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee, the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Engine, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section -69- 70 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses); (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and any other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to -70- 71 reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (b) hereof and of Section 15 hereof, as the case may be, with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts -71- 72 shall be paid to and held by Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Engine and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Engine complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris, if the relevant primary insurer shall have obtained reinsurance and such reinsurance (i) is on the same terms as the original insurance and includes the provisions required by this Agreement; (ii) -72- 73 provides in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contains a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] dated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Engine or the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar engines or similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for similar engines as the engines in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until -73- 74 application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims (whether or not based on strict liability), damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, costs and expenses set forth in Section 21(j) hereof and reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee, from (and including) the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Engine or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Engine to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations -74- 75 thereunder or to file the documentation necessary to continue FAA registration of the Engine), delivery, non- delivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Engine or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein or in the Operative Documents of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Engine or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of the Engine or such Part, or otherwise regardless of when such defect shall be discovered, whether or not the Engine or such Part is at the time in the possession of Lessee, and regardless of where the Engine or such Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide -75- 76 for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Engine), (v) an underlying act which occurs after the Engine has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as -76- 77 and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Engine or any Part thereof, either in the air or on the ground, or which may be caused by any defect in the Engine or such Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of the Engine or such Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not the Engine or such Part is at the time in the possession of Lessee, and regardless of the location of the Engine at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents (except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the -77- 78 period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition), (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and, so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee -78- 79 has the right to control the defense thereof is materially prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section. Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Engine or of the residual value of the Engine. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease or any of the other Operative Documents and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising -79- 80 in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft and the Engine. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor cause -80- 81 any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture and in the Engine, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and rerecordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Engine, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Engine, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Engine and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in -81- 82 favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Engine or any other transfer or assignment by Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Section 16. Return of Engine and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Engine to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree. (b) Status Upon Return. Upon any Return Occasion hereunder, the Engine shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy engine by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act which are in effect on the date of such Return Occasion; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Engine to be operated under, and in full compliance with, an applicable standard certificate of airworthiness and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vi) in good and airworthy operating condition, and in the same condition as when delivered to -82- 83 Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (vii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Substitute Engine. In the event any engine not owned by Lessor shall be redelivered on any Return Occasion, without limiting Lessee's obligations under the Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engine or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on an Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engine, assuming the Engine was in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any such Engine at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens. (d) Records and Documents. Upon the return of the Engine, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Engine, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Engine and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Engine under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Engine under the Maintenance Program, in each case as Lessor -83- 84 may reasonably request, and all documentation with respect to the Engine set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Engine on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically- held materials which have been supplied by or on behalf of Manufacturer or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Engine, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing; such identification shall be sufficient to allow traceability of such components and assemblies from the date on which such components and assemblies were manufactured to the date on which such identification is made, and to measure the service histories, accumulated cycles or flight hours as applicable and remaining service lives in each engine, including but not limited to the Engine, in which such components and assemblies have been used. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an engine which has been operating in regulated commercial air service, shall be delivered to Lessor with the Engine. Any documents or records required to be delivered hereunder shall be in English. -84- 85 (e) Condition of Engine. Upon any Return Occasion, Lessee shall return such Engine to Lessor in such condition that the Engine shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Engine available to Lessor at the location where the designated check or checks required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Engine and Parts structure and parts, at Lessee's expense (excluding compensation to representatives of Lessor), in order to verify that the condition of such Engine complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such check or checks and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such checks are being performed and shall have such duration as to permit the opening of any areas of the Engine which are customarily necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Engine and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to the Engine undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations hereunder continued, on a daily basis until the Final Inspection shall have been concluded and Lessee shall pay Rent during any such extension in an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value during such extension shall equal the Stipulated Loss Value on the last day of the Basic Term or Renewal Term, as the case may be); provided, however, that Lessee shall not be required to pay Rent with respect to the Engine during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except -85- 86 that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Engine Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Engine pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Engine Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Engine. Such Records and Documents shall be sufficient to enable Lessor to trace the service history, accumulated cycles or flight hours as applicable and remaining service life of the Engine, including but not limited to a listing of each airframe on which the Engine has been installed. (h) Corrections and Subsequent Corrections. To the extent that the Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as the Engine is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of the Engine and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of the Engine, at commercial rates then charged by the Person selected by Lessor to perform such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. Nothing set forth in this paragraph shall constitute a limitation on Lessor's or Owner Participant's ability to recover from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the return of the Engine at the time, in the place and in the condition as specified in this Section 16 and Exhibit E hereto. (i) [Intentionally Left Blank]. (j) Exportation of the Engine. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably -86- 87 request to assist Lessor in obtaining any required documents in relation to the export of the Engine from the United States (including, without limitation, a valid and subsisting export license). (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Engine which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Engine for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Engine after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Engine and the records relating thereto to the extent it does not unreasonably interfere with the operation or maintenance of the Engine or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days, after the date on which such -87- 88 payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days, after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto; provided that any failure of Lessee to pay to Lessor or Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless Lessor delivers notice to Lessee; or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Engine outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Engine; or (c) Any representation or warranty made by Lessee herein or in the Refunding Agreement or in any certificate furnished by Lessee in connection herewith or therewith is or was incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or the Refunding Agreement, and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c), or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary -88- 89 petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within ninety (90) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of ninety (90) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or -89- 90 (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to the Engine as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's cost and expense, immediately return, and Lessee hereby agrees that it shall return promptly, the Engine to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Engine) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if the Engine were being returned at the end of the Term hereof with respect to the Engine. In addition, Lessor or Lessor's agent, at its option and to the extent permitted by applicable Law, may but shall not be obligated to enter upon the premises where the Engine is located to take immediate possession of and, at Lessor's option, remove the same by summary proceedings or otherwise, all without liability accruing to Lessor or Lessor's agent for or by reason of such entry or taking of possession or removal whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. -90- 91 (b) With or without taking possession thereof, sell or cause to be sold, the Engine or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Engine, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Engine to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Engine as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or Renewal Rent Payment Date, an amount equal to the Basic Rent or the Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Engine for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Engine, or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent due to and including the -91- 92 date of sale, plus the amount by which the Stipulated Loss Value of the Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In lieu of exercising its rights under paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in advance for the period on and after the Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such Engine due and unpaid for any period prior to and including, and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss Value for the Engine computed as of such Stipulated Loss Value Date; and upon such payment of liquidated damages and the payment of all other Rent then due hereunder and the discharge of the Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without recourse or warranty (except as to the absence of Lessor's Liens and the Lien of the Indenture), all right, title and interest of Lessor in and to the Engine to Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and deliver such documents evidencing such transfer and take such further action as Lessee shall reasonably request. (f) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the or Engine under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such or Engine, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Engine due after the time of reletting) any unpaid Rent for such Engine due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Engine which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for the Engine would have expired but for Lessee's default, discounted periodically (equal to -92- 93 installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (g) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Engine shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. (h) Lessor may exercise any other right or remedy which may be available to it under applicable laws, or may proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above, until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Engine in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Engine in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. -93- 94 In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's property in repossessing and holding the Engine or Part, except for direct damages caused by Lessor's gross negligence or willful misconduct, and (iv) shall have the right to maintain possession of and dispose of the Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Engine or Part for sale or lease, advertising the sale or lease of the Engine or Part and selling or releasing the Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Engine or Part pursuant to this Section , Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor -94- 95 shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d), (e) or (f) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Engine leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Engine, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. The provisions of this Section 18 shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. Section 19. Security for Obligations. Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and -95- 96 perfected security interest in all of Lessor's right, title and interest in and to the Engine in favor of Indenture Trustee. Lessee hereby consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) (other than Expected Rights) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. -96- 97 Section 20. Renewal Option. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Engine for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, in no event less than the greater of 120% of the "fair market sales value" of the Engine as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. -97- 98 Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, each of Lessor and Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Engine or any Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Engine for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices and instructions between Lessor and Lessee required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). All notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee -98- 99 (until such time as the Lien of the Indenture is discharged) and to Owner Participant, at such address as Owner Participant and Indenture Trustee, respectively, may designate from time to time. All notices and instructions hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Engine hereunder, and all rents, revenues, profits and income therefrom, in accordance with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it, provided that Lessor and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through -99- 100 Trustee, Note Holder or any other Person lawfully, claiming by or through them, and provided further, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. -100- 101 (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications hereof or thereof, or waivers or consents hereunder or thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the Financing Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft engines similarly situated to Lessor. (l) [Intentionally Left Blank]. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United States District Court for the Southern District of New York. Each of Lessee and Lessor represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee or Lessor hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, it hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to -101- 102 the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Each of Lessee and Lessor hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee or Lessor as from time to time may be designated by Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns (as applicable). Final (after all appeals) judgment (the enforcement of which has not been stayed) against either Lessee or Lessor obtained in any suit originally brought in the court of the State of New York in New York County or in the United States District of New York shall be conclusive, and, to the extent permitted by applicable Law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings, against Lessee or Lessor, as the case may be, or any of their assets in the courts of any country or place where such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this -102- 103 Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Engine for all purposes hereof without the necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease, as amended and restated by this Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] (and as otherwise extended, amended, modified, renewed or supplemented), shall be governed by Article 2-A of the Uniform Commercial Code of New York. -103- 104 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by its duly authorized officer as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:_________________________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:_________________________________________ Title: -104- 105 The undersigned acknowledges receipt of this original counterpart of the foregoing Lease on this ____ day of November, 1996 and consent to the terms hereof. FLEET NATIONAL BANK, not in its individual capacity, but solely as Indenture Trustee By:_________________________________________ Title: -105- 106 TABLE OF CONTENTS Page ---- Section 1. Definitions........................................... 1 Section 2. Agreement to Lease.................................... 19 Section 3. Delivery and Acceptance; Term......................... 19 (a) Time of Delivery................................ 19 (b) [Intentionally Left Blank.]..................... 19 (c) Acceptance of Engine............................ 19 (d) Term of Lease................................... 20 Section 4. Rent.................................................. 20 (a) Rent............................................ 20 (b) Minimum Payments................................ 20 (c) Date, Place and Method of Payment............... 21 (d) Prohibition Against Setoff, Counterclaim, Etc............................... 21 Section 5. Representations, Warranties and Covenants............. 23 (a) Warranties and Disclaimer of Warranties...................................... 23 (b) Representations and Warranties of Lessor. ..................................... 24 (c) No Amendments to Financing Documents............ 24 (d) Suppliers' Warranties........................... 25 Section 6. Possession and Use.................................... 25 (a) Possession...................................... 25 (b) [Intentionally Left Blank]...................... 32 (c) Lawful Insured Operations....................... 32 (d) Maintenance..................................... 33 (e) Registration and Insignia....................... 35 Section 7. Inspection............................................ 35 Section 8. Additional Covenants of Lessee........................ 36 (a) Financial Information........................... 36 (b) Maintenance of Corporate Existence.............. 38 (c) Maintenance of Status........................... 38 (d) Payment of Taxes................................ 38 (e) Consolidation, Merger, Etc...................... 39 (f) Information..................................... 40 (g) Place of Business............................... 40 (h) Certain Limitations on Use...................... 40 (i) Section 1110.................................... 41 (j) Permits and Licenses............................ 41 (k) Security Opinion; Annual Certificate............ 41 (l) Letter of Credit................................ 43 107 Page ---- Section 9. Replacement of Parts; Alterations, Modifications and Additions........................... 45 (a) Replacement of Parts............................ 45 (b) Alterations, Modifications and Additions....................................... 46 (c) Pooling......................................... 48 Section 10. General Tax Indemnity................................. 49 (a) Indemnity....................................... 49 (b) Exclusions...................................... 51 (c) Covered Income Tax.............................. 53 (d) Reports and Returns............................. 55 (e) After-Tax Basis................................. 55 (f) Tax Benefit..................................... 56 (g) Payment......................................... 56 (h) Contest......................................... 57 (i) Refund.......................................... 59 (j) Diligence....................................... 59 (k) Affiliated Group................................ 59 (l) Verification.................................... 60 (m) Survival........................................ 60 Section 11. Loss, Damage and Requisition.......................... 60 (a) Event of Loss with Respect to the Engine...................................... 60 (b) Conveyance of Replacement Engine................ 62 (c) Application of Proceeds and Payments............ 64 (d) Requisition for Use by Government with Respect to the Engine...................... 65 (e) Application in Default.......................... 65 Section 12. Insurance............................................. 66 (a) Public Liability and Property Damage Insurance................................ 66 (b) Insurance Against Loss or Damage................ 67 (c) Application of Insurance Proceeds for an Event of Loss............................ 70 (d) Application of Insurance Proceeds for Other than an Event of Loss..................... 71 (e) Application in Default.......................... 71 (f) Certificates.................................... 72 (g) Reinsurance..................................... 72 (h) Storage......................................... 73 (i) Amounts Held.................................... 73 (j) After the Term.................................. 74 (k) Governmental Indemnity.......................... 74 Section 13. General Indemnity..................................... 74 -ii- 108 Page ---- Section 14. Liens................................................. 79 Section 15. Protection of Title and Further Assurances............................................ 80 Section 16. Return of Engine and Records.......................... 82 (a) Return.......................................... 82 (b) Status Upon Return.............................. 82 (c) Substitute Engine............................... 83 (d) Records and Documents........................... 83 (e) Condition of Engine............................. 85 (f) Final Inspection................................ 85 (g) Engine Records and Documents.................... 86 (h) Corrections and Subsequent Corrections..................................... 86 (i) [Intentionally Left Blank]...................... 86 (j) Exportation of the Engine....................... 86 (k) Service Bulletin and Modification Kits............................................ 87 (l) Storage Upon Return............................. 87 (m) Resale/Release Cooperation...................... 87 Section 17. Events of Default..................................... 87 Section 18. Remedies.............................................. 90 Section 19. Security for Obligations.............................. 95 Section 20. Renewal Option........................................ 97 Renewal Option........................................ 97 Section 21. Miscellaneous......................................... 98 (a) Severability, Amendment, and Construction.................................. 98 (b) GOVERNING LAW................................... 98 (c) Notices......................................... 98 (d) Lessor's Right to Perform for Lessee............ 99 (e) Counterparts.................................... 99 (f) Quiet Enjoyment................................. 99 (g) Brokers.........................................100 (h) Investment of Funds.............................100 (i) Entire Agreement; Amendment.....................100 (j) Expenses........................................101 (k) Federal Bankruptcy Code.........................101 (l) [Intentionally Left Blank]......................101 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial................101 (n) Limitation on Recourse..........................103 -iii- 109 Page ---- (o) Successor Trustee...............................103 (p) Article 2-A of the UCC..........................103 ANNEXES Annex A - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Engine Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 2 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Permitted Sublessee Assignment Consent Exhibit G - [Intentionally Left Blank] Exhibit H - [Intentionally Left Blank] Exhibit I - [Intentionally Left Blank] Exhibit J - [Intentionally Left Blank] Exhibit K - Form of Engine Status Report -iv- EX-4.31 32 RESTATED ENGINE LEASE AGREEMENT[GPA 1991 AWA-E2] 1 EXHIBIT 4.31 AMENDED AND RESTATED ENGINE LEASE AGREEMENT THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT dated as of March 15, 1991 and amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company", and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as 2 defined in the Pass Through Trust Agreement); and the term "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or elect or cause the direction or election of the management and policies of a Person whether by contract or otherwise. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that the Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that the Engine or such Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that the Engine or such Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Engine as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section 18 in which case only Lessor shall select such appraiser (which -2- 3 appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of the Engine or such Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of the Engine or such Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of the Engine or such Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Engine shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Engine pursuant to Section 4(a)(i). "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment -3- 4 due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 2. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. -4- 5 "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean March 27, 1991 being the date the Engine was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) the IAE Model V2500-A1 engine listed by manufacturer's serial number in Lease Supplement No. 1, (ii) Parts or components thereof, (iii) ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Engine Records and Documents and all other manuals and records with respect to such Engine, and (v) all substitutions, replacements and renewals of any and all thereof, including but not limited to, any replacement engine which may from time to time be substituted, pursuant to Section 6(a) or 11(a), for the Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. "Engine Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Engine: (a) loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days, but in no event later than the last day of the Term; -5- 6 (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any law, rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of the Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing beyond the last day of the Term; or (h) as otherwise provided herein. "Expiration Date" shall mean the date specified in Lease Supplement No. 2, on which date the Basic Term of this Lease shall expire. -6- 7 "FAA" shall mean the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Federal Aviation Act" shall mean the sections of title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass Through Trust Agreement and each supplement thereto and any certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Engine by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Engine by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. -7- 8 "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the Engine or its operations. "GPA Aircraft" shall mean any aircraft which is the subject of any of the Other Leases. "Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture) and each Pass Through Trust, each Pass Through Trustee (in its individual capacity and as trustee under the Pass Through Trusts), the Subordination Agent and each Liquidity Provider, their respective successors and permitted assigns and (and, in the case of a permitted assign of Owner Participant that is a partnership, the partners of such partnership), and any combination thereof and their respective officers, directors, agents, servants, employees, subsidiaries, Affiliates and shareholders. "Indenture" shall mean the Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, and amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. -8- 9 "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture computed on the basis of a 360-day year and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1 and Lease Supplement No. 2 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1991 AWA-E2] No. 1 dated March 27, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1991 AWA-E2] No. 2, substantially in the -9- 10 form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Engine hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Engine or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) not related to its interest in the Engine or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been -10- 11 granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Engine, the Trust Estate, the Operative Documents or the Financing Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except Liens resulting from a transfer not permitted by such Section ) or 20 of this Lease or pursuant to Section 10 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Engine or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft which is applicable to IAE AG V2500 Engines in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Engine is subject to a Permitted Sublease to a Foreign Air Carrier any other FAA approved maintenance program for the Engine which is approved by the aviation authority of the country of -11- 12 registry and complies with the requirements applicable to maintenance of the Engine contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Engine, including, but not limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean IAE in its capacity as manufacturer of the Engine, together with any subcontractor or supplier thereof. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, any sublease, the Tax Indemnification Agreement, the Financing Documents, that certain letter dated as of the Restatement Date and any certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Engine Lease Agreement [GPA 1991 AWA-E2], with respect to the Aircraft, dated as of March 15, 1991, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification -12- 13 Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, and amended and restated as of the Restatement Date between the Original Head Lessee and Owner Participant, as amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA I, Inc., a Connecticut corporation. "Original Sublease" shall mean the Initial Sublease (as defined in the Original Head Lease) as in effect immediately prior to the Restatement Date. "Other Leases" shall mean the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, each as amended, supplemented or otherwise modified from time to time. "Other Letters of Credit" shall mean any and all letters of credit pursuant to Section 8(l) of the Other Leases. "Owner Participant" shall mean _______________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. -13- 14 "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Participation Agreement" shall mean the Participation Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named therein, as amended by the Letter Agreement dated as of July 29, 1993, as the same may be further amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, -14- 15 joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Engine Sale Agreement dated as of September 28, 1990, among IAE and Original Head Lessee, as the same may be amended, supplemented or otherwise modified to the extent permitted by the terms thereof from time to time. "Purchase Documents" shall mean the Purchase Agreement and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Renewal Rent Payment Date shall be made on the next succeeding Business Day. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Engine" shall have the meanings specified in accordance with its description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. -15- 16 "Return Occasion" shall mean the event that occurs when possession of the Engine is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Shipping Stand" shall mean the cradle designed to hold an engine which has a suitable shock mounting system to allow the engine to be transported by truck or other vehicle without damage, listed by part number and manufacturer's serial number in Lease Supplement No. 1. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from the Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20(ii) (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than -16- 17 a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Engine. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth, on Exhibit A hereto. "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of (a) an incipient Event of Loss and the operation of Section 11 hereof or (b) the need to correct any failure of the Engine to satisfy the requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this definition of "Supplemental Rent", not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Pro Rata Share" means as of any date of determination a fraction the numerator of which -17- 18 is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "equipment notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-E2], dated as of December 12, 1990, and as amended and restated as of November 26, 1996, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Taxing Authority" shall have the meaning specified in Section 10(a). "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 2 and the Renewal Term, if Lessee extends the Term in accordance with Section 20, in either case, as extended or deemed extended as a result of the occurrence of an event described in clause (iii) to the definition of "Supplemental Rent" in this Lease, for which the Engine is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991 as amended by Trust Supplement No. 1, and as further amended by Trust Supplement No. 2, between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include each Trust Supplement. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1 and Trust Supplement No. 2 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. -18- 19 "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1991 AWA-E2] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1991 AWA-E2] No. 2 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Engine to a third party pursuant to which such Engine (i) shall be operated solely by regular employees of Lessee possessing all current certificates and licenses required under the Federal Aviation Act (it is understood that cabin attendants need not be regular employees of Lessee) and Lessee otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee in accordance with its normal maintenance practices and this Lease to which the Engine is subject, and otherwise the insurance required hereunder shall be maintained and the Engine shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Engine to Lessee, and Lessee hereby agrees to lease the Engine from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term. (a) Time of Delivery. The Engine was delivered to Lessee, and Lessee accepted delivery of the Engine, on March 27, 1991. (b) [Intentionally Left Blank.] (c) Acceptance of Engine. The Engine leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Engine for all purposes of this Lease and Lessee's -19- 20 acceptance of the Engine was conclusive evidence that, as between Lessor and Lessee, the Engine was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. Section 4. Rent. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in arrears as set forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable ten (10) Business Days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic or Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to the terms hereof shall survive the expiration or termination of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by -20- 21 reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in the City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except for all Excepted Payments. All Excepted Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Engine, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without -21- 22 limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Engine (subject to the provisions of Section 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Engine or any other Person; (iii) any Liens with respect to the Engine; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any sublease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Engine or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay, to Indenture Trustee or -22- 23 Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE ENGINE WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE ENGINE ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE ENGINE UNDER THIS LEASE OR BY HAVING ACQUIRED THE ENGINE OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE ENGINE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE ENGINE, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE ENGINE, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR -23- 24 DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE ENGINE) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE ENGINE OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE ENGINE OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE ENGINE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a)(i) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE ENGINE, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that, (x) on the Delivery Date, Lessor had, and on the Restatement Date Lessor has, the right to lease the Engine hereunder and (y) on the Delivery Date the Engine was free of Head Lessor's Liens and on the Restatement Date the Engine is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume or suffer to exist any Lessor's Lien on the Engine. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. -24- 25 The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of this Lease and the delivery of the Engine and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Engine continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or propulsion system performance guaranty, of the Manufacturer or Manufacturer's subsidiary, if any, or any subcontractor or vendor with respect thereto under the Purchase Documents (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Engine), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF -25- 26 THE ENGINE; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Engine or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject the Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that Lessor has been given an opportunity to review the interchange, maintenance, servicing, pooling or similar arrangement, including but not limited to all agreements and other documents relating thereto and has consented, which consent shall not be unreasonably withheld, to the placement of the Engine into such interchange, maintenance, servicing, pooling or similar arrangement and provided, further that (A) no transfer of the registration of the Engine shall be effected in connection therewith and (B) (i) no such agreement or arrangement contemplates, results in or requires the transfer of title to the Engine, and (ii) if Lessor's title to the Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to the Engine and not an Event of Default and Lessee shall comply with Section 11(a) hereof in respect thereof; (2) deliver possession of the Engine to the Manufacturer, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on the Engine or any part thereof or for alterations or modifications in or additions to the Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Engine to the United States of America or any instrumentality or agency thereof pursuant to a sublease; -26- 27 (4) (i) subject the Engine to the Civil Reserve Air Fleet Program and transfer possession of the Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; (ii) subject the Engine to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install the Engine on an airframe owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engine), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or the engine installed thereon; (6) install the Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that the Engine leased to Lessee hereby shall not become subject to the Lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of the Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the owner of the Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written -27- 28 agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in the Engine by reason of the Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install the Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to the Engine and Lessee shall comply with Section 11(a) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in the Engine under applicable Law until compliance by Lessee with such Section 11; (8) enter into a Wet Lease for the aircraft on which the Engine is installed in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee shall enter into any Wet Lease for a period of more than six months (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given at least ten (10) Business Days prior to entering into such Wet Lease); or (9) sublease the Engine to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section 6(a) hereof (other than the transfer of the Engine which is deemed to have been an Event of Loss) and any Wet Lease shall be expressly subject and -28- 29 subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of the Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable; (6) The sublessee under any Permitted Sublease, in its consent thereto, shall confirm that from and after the occurrence and continuance of an Event of Default and, unless an Event of Default specified in Section 17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease being deemed or declared in default, Lessor (and, so long as the Lien of the Indenture shall not have been discharged, Indenture Trustee) shall be entitled to enforce directly and in its own name all representations, -29- 30 warranties, indemnities, covenants and agreements under the applicable Permitted Sublease; and (7) Each Permitted Sublease shall (A) provide that (I) the Engine may not be operated or used other than as provided in this Lease and shall be maintained and operated as required hereunder, (II) Lessor may avoid or terminate such sublease following an Event of Default hereunder and (III) to the extent not accomplished by an assignment of the Permitted Sublease, upon the occurrence of an Event of Default hereunder, Lessee's rights under such Permitted Sublease shall automatically be deemed assigned to Lessor; and (B) be a "net lease" in accordance with industry practice and shall be comparable to, or more restrictive than, this Lease and under such Permitted Sublease (except a sublease to the United States Government or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor under such Permitted Sublease, must be entitled to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted Sublease shall contain provisions regarding such Section 1110 which are substantially the same as the related provisions of this Lease. In addition, from and after the occurrence and continuance of an Event of Default, all rent and other amounts payable by the Permitted Sublessee under such Permitted Sublease shall be paid directly to Indenture Trustee and, upon discharge of the Lien of the Indenture, to Lessor. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Engine or the aircraft on which the Engine is installed to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains -30- 31 diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Engine in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Engine by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Engine in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Engine, to the registry of the Engine in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall -31- 32 be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. Any Permitted Sublease shall expressly provide that the rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under the other Operative Documents or constitute a waiver of Lessor's rights or remedies hereunder or under the other Operative Documents, and such rights shall continue as if such Permitted Sublease had not occurred. Any Permitted Sublease shall expressly prohibit any further sub-sublease or assignment or any other similar transfer of the Engine or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease together with an assignment, as security for Lessee's obligations hereunder, of such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days following the effective date of such Permitted Sublease. (b) [Intentionally Left Blank] (c) Lawful Insured Operations. Lessee will not permit the Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, any -32- 33 manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the aircraft on which the Engine is installed is registered with the FAA, or the applicable laws of any other jurisdiction in which the aircraft on which the Engine is installed may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Engine or impair the interest of Lessor therein or impair the validity or priority of the Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Engine during the Basic Term or then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Engine, or suffer or permit the Engine to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Engine is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Engine or suffer or permit the Engine to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to -33- 34 substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, any other applicable rules, regulations and requirements by any other applicable Governmental Entity, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Engine, as shall be the case with respect to similar engines owned by Lessee without discrimination and as if Lessee owned the Engine and was going to use the Engine in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Engine, as shall be the case with respect to similar engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Engine and was going to use the Engine in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Engine shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by the central civil aviation authority of the country of registry, and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Engine in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Engine or cause the Engine to be kept in such condition as is necessary to maintain in good standing the airworthiness of such Engine at all times under the Federal Aviation Act and any other applicable law or the applicable laws of any other jurisdiction in which the Engine may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided -34- 35 under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the interests of Lessor and Indenture Trustee with respect to the Engine at all times, at its expense, to be duly recorded under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Engine and this Lease at all times. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") on the Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, within five (5) Business Days of delivery of the Engine, Lessee shall fasten or cause to be fastened on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Engine to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Engine as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause any sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee -35- 36 on reasonable prior notice at reasonable times to visit, inspect and survey the Engine, its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as no Default or Event of Default has occurred hereunder inspections shall be endeavored to be performed during regularly scheduled maintenance checks of the Engine. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Engine. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's -36- 37 Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Engine, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) within fifteen (15) days following the end of each calendar month throughout the Term, an Engine status report, substantially in the form of Exhibit K hereto, including, without limitation, (A) a summation of hours and cycles accumulated on the Engine by individual serial number during such preceding calendar month and (B) the identity of the airframe (including the "N" number and, at Lessor's request, ownership and lien interests in respect thereof) on which the Engine was installed as of the end of each such calendar month, and, if Lessor so requests, the location of any such airframe. The foregoing shall not be deemed to require reports regarding hours or cycles on any Parts; (vi) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by -37- 38 such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vii) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Engine (or any Part) with a repair or replacement cost (including labor charges) in excess of $1,000,000; (viii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (ix) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. -38- 39 (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets (in one or a series of transactions) to any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the Laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. -39- 40 No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Engine as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its Federal and state income tax returns (or to permit the filing of the Federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Engine. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Engine only in commercial passenger operations and related cargo operations. Unless the Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Engine or permit the Engine to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Engine for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the Maximum Foreign Use Percentage. Unless Owner Participant otherwise agrees, prior to permitting the Engine to be operated in any member state of the European Union or other European country, Lessee shall -40- 41 deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all engines (including, without limitation, the Engine) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] unless it had available to it the benefits of a lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Engine under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Engine hereunder. The acknowledgement, covenant and agreement contained in this Section 8(i) shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Engine or any Part or the execution, delivery or performance of this Lease or the enforcement thereof against Lessee. (k) Security Opinion; Annual Certificate. (i) During such times that the Engine is recorded under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel -41- 42 rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto, (ii) UCC financing statements and (iii) such other appropriate documents, as is necessary to maintain the perfection of Lessor's title to and/or interest in and Indenture Trustee's security interest in the Engine and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions or no action is necessary to maintain the perfection of such title and/or security interest; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Engine is recorded under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of -42- 43 Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Engine and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (l) Letter of Credit. As security for the obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default has occurred, which amount may be applied, retained or utilized as provided in the penultimate paragraph of this Section 8(l); (ii) be maintained in full force and effect at all times until ninety-one (91) days after the Expiration Date with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that the Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long term unsecured debt rating at least equal to its rating on the date hereof; (iii) be expressly designated as transferrable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term or the Lessor is holding proceeds of the Letter of Credit that were retained and not applied as provided herein, then Lessor shall return the Letter of Credit to Lessee or terminate it, and/or return any retained or unapplied proceeds, ninety-one (91) days following the date of such expiration or other termination of this Lease so long as no Default or Event of -43- 44 Default has occurred or is continuing hereunder or under any Other Lease, upon payment in full of all amounts then due and owing to Owner Trustee and Owner Participant under the Operative Documents. If an Event of Default has occurred or is continuing under this Lease or an Event of Default has occurred or is continuing under any Other Lease (as therein defined), in addition to any other rights and remedies Lessor may have hereunder, under any Other Lease, any sublease and any and all other remedies available at Law (including, without limitation, the Uniform Commercial Code as adopted in New York) or equity and upon exercising its rights under the Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to (i) hold any amounts drawn under the Letter of Credit or Other Letters of Credit as security for Lessee's obligations under this Lease or, the Other Leases, (ii) retain any amounts drawn under the Letter of Credit or Other Letters of Credit for its own account and apply (including, without limitation, by way of set off against) such drawn amounts, as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease and the Other Leases) to remedy any breach by Lessee of this Lease or any other Operative Documents or Other Leases or (iii) recompense Lessor, Owner Participant or any of their respective Affiliates for any loss, damage, cost or expense or other Claim due or owing hereunder or under the Other Leases; provided, however, that in the case of any drawing in respect of any claim for payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts which would (absent such Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders); provided further, however, that neither the amount so applied at any one time nor the aggregate amount so applied at different times shall reduce the amount of any installment or payment of Rent (whether upon the termination of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in full the amounts required to be paid on account of the principal of and any interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or credit with respect to any amounts so applied. Any amount retained shall be considered the property of Lessor and Lessor may commingle such amount with its general funds and Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum extent permitted by applicable Law, any interest therein. -44- 45 Lessee shall not be entitled to any interest or other earnings on such retained amount and such amount shall not be refundable. On application of all or any portion of the amounts drawn under the Letter of Credit or any Other Letters of Credit in accordance with this Section 8(l) or the Other Leases, Lessee shall on demand reinstate the amount of the Letter of Credit or Other Letters of Credit, as the case may be, to its or their full Face Amount or provide to Lessor one or more additional Letters of Credit meeting the requirements of this Section 8(l), so that the Letter of Credit and each of the Other Letters of Credit at all times equals the original Face Amount provided for herein. During such times as Lessor shall elect to hold all or part of the proceeds of the Letter of Credit or Other Letters of Credit as security for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee shall not be obligated to reinstate the amount of the Letter of Credit or Letters of Credit, as the case may be, in respect of the proceeds so held. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). -45- 46 All Parts which are at any time removed from the Engine shall remain the property of Lessor, subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Engine and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Engine as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee, free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Engine to the extent made mandatory for Lessee (or a sublessee) in respect of the Engine or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Engine or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Engine and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Engine as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. -46- 47 Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Engine, remove any Part of such Engine, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Engine on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Engine pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Engine without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Engine would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Engine (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Engine to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Engine; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Engine, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not -47- 48 removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Engine in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Engine as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Engine. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Engine, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided that Lessor has been given an opportunity to review the pooling arrangement, including but not limited to all agreements and other documents relating thereto, and has consented, which consent shall not be unreasonably withheld, to the placement of Parts into such pooling arrangement and provided further that the Part replacing such removed Part shall be incorporated or installed in or attached to the Engine in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the -48- 49 Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of and transferring title to Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Engine a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant -49- 50 would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee provided that in any circumstance in which the Lessor is required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, any Engine or any Part thereof or interest therein, or otherwise, with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, by any federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re-registration, deregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or -50- 51 (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any modification or reissuance, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, Taxes imposed on, based on, or measured by, the gross or net income of such Indemnitee or Taxes in lieu thereof (including minimum taxes, withholding taxes and taxes on or measured by any item of tax preference) imposed by the federal government of the United States of America (other than taxes in the nature of sales or use taxes, license taxes, or property taxes), (ii) In the case of any Indemnitee, Taxes imposed on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any state, local or foreign government or taxing authority (other than Taxes in the -51- 52 nature of sales Taxes, use Taxes, license Taxes or property Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which arise out of or are caused by any gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee or any sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (A) an Event of Default and the exercise by any Indemnitee of its remedies under this Lease or the Indenture, as the case may be or (B) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms hereof; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed on a transferee of such Indemnitee of any interest in the Engine or any Part or any interest in the Operative Documents to the extent the amount of any such Taxes exceeds the amount of such Taxes that would have been imposed had there not been any such transfer, unless such transfer results from action by or on behalf of such Indemnitee taken in connection with any Event of Default that has occurred and is continuing or upon the request of the Lessee, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this Section 10(b) or to a failure by Lessee to satisfy its obligations related to such return, -52- 53 (vii) With respect to an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, Taxes which arise out of or are caused by (i) any act or omission or material misrepresentation of any Indemnitee where such act or omission is not permitted by the Financing Documents or the Operative Documents, or (ii) a failure by an Indemnitee to fulfill its contest obligations, and, in the case of the Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a result of a breach of such Indemnitee's representations, warranties, or covenants contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any material respect, or from a failure by such Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Engine, (ix) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust, or (x) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) in the case of an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (other than taxes which are in the nature of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee (A) by any state or local Taxing Authority other than Taxes imposed by any such state or local jurisdiction in which the Indemnitee has its principal place of -53- 54 business or is subject to such Tax as a result of business transactions or other presence unrelated to the transactions contemplated by the Financing Documents or the Operative Documents, unless such Taxes are imposed by such jurisdiction solely as a result of (x) the operation of the Engine in such jurisdiction or (y) the transactions contemplated by the Operative Documents, to the extent such taxes are directly attributable to such operation of the Engine or to such transactions, and (B) by any foreign jurisdiction which are imposed as a result of Lessee's or sublessee's activities in such foreign jurisdiction in connection with the transactions contemplated by the Financing Documents or the Operative Documents, provided, however, a Covered Income Tax also includes the incremental amount of franchise taxes, taxes on doing business, capital stock taxes or taxes on, based on or measured by gross or net income of the original Owner Participant attributable to the Lease (excluding, however, any taxes that would be excluded under any provision other than clauses (i) and (ii) of subsection (b) of this Section 10) which are imposed by the "Home State" of a sublessee (the Home State of a sublessee being the jurisdiction in which such sublessee maintains its principal operations and maintenance center), or in the absence of a Permitted Sublessee, the jurisdiction where the Engine is stored, but only to the extent such incremental taxes result from activities of Lessee or Permitted Sublessee under the Lease in or with respect to the Home State or the jurisdiction where the Engine is stored, and taking into account in calculating such incremental taxes all state tax benefits and savings in the Home State resulting from activities of Lessee or Permitted Sublessee under the Lease, disregarding for such purpose any actual or constructive changes in ownership of the original Owner Participant, provided, however, that Owner Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's liability for indemnity payments attributable to taxes incurred in sublessee's Home State with respect to each Permitted Sublessee; and (ii) in the case of the Indenture Trustee or the Trust Indenture Estate, any Tax based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (including minimum taxes, withholding taxes, and taxes on or measured by any item of tax preference) imposed on such Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or -54- 55 possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to the Owner Participant or Owner Trustee or will notify the Owner Participant or Owner Trustee of such requirement and make such report or return in such manner as shall be reasonably satisfactory to the Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of Taxes imposed on the Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest -55- 56 federal corporate income tax rate applicable to Owner Participant in the year of payment and the highest corporate income tax rate in the jurisdiction in which Owner Participant files a consolidated state income tax return (currently Virginia). (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (ii) the reduction calculated on the same basis as the gross up in Section 10(e) hereof in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (i) above would exceed (A) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (B) the portion of all prior payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are -56- 57 the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. In the event that an Indemnitee receives a written notice of a claim which, if sustained, would require the payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's sole expense, in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in whole or in part separately in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, the Lessee shall not be permitted to contest in the name of such Indemnitee if such contest involves Taxes imposed against such Indemnitee that are unrelated to the transactions contemplated by the Financing Documents or the Operative Documents or Taxes based on or measured by the gross or net income of the Indemnitee, and provided, that if the Indemnitee determines in good faith that there is a material possibility of a material adverse impact upon the Indemnitee with respect to such contest, such Indemnitee may retain or reassert control of any contest that Lessee would otherwise be permitted to contest; provided, further, that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) Lessee shall have (a) furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to -57- 58 Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352) exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), provided however, that in the event the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of tax counsel, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which the Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of statutory changes-in-law, it is as likely as not that the position will prevail, and (b) agreed to pay Indemnitee for all reasonable costs and expenses which Indemnitee may incur in contesting such claim (including without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayment of estimated taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interests), (ii) a threshold amount of $50,000 for any individual claim is at issue, (iii) there is no substantial risk or danger of the sale, loss or forfeiture of the Engine, (iv) Lessee shall have admitted its liability to indemnify Owner Participant for such claim or set forth in writing why it is not so liable, (v) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, the Lessee shall have advanced to such Indemnitee sufficient funds (on an interest free basis) to make such payments, (vi) no claim shall be appealed to the U.S. Supreme Court, (vii) no appeal of a trial court decision shall be undertaken unless Lessee at its sole cost and expense shall have furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that -58- 59 Indemnitee is more likely than not to prevail in such appeal, and (viii) no Event of Default has occurred and is continuing. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released from its responsibility to contest such claim or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include any member of such affiliated group. -59- 60 (l) Verification. At Lessee's request, the amount of any indemnity payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified by an independent public accounting firm selected by such Indemnitee and reasonably satisfactory to Lessee. In order to enable such accountants to verify the indemnity amount, such Indemnitee shall provide to the accountants (for their own confidential use) information reasonably necessary for such verification to which Lessor has access; provided, however, such information shall not be disclosed to Lessee or any person other than such accountants. The fee of such firm shall be payable by Lessee unless such verification shall result in an adjustment in Lessee's favor exceeding 10% of the amount of the indemnity payment. (m) Survival. All of the obligations and rights of Lessee and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the Engines or any Part thereof shall survive the assignment, or expiration or other termination, of the Lease with respect to the Aircraft for a period of six (6) years from the occurrence of such assignment, or expiration or termination, except that such obligations shall survive the expiration of such six (6) year period with respect to any claim asserted prior to the expiration of such six (6) year period but in either case only to the extent such obligation or claim relates to events which occurred or conditions which existed during the Term. Such obligations are expressly undertaken by Lessee for the benefit of, and shall be enforceable by, Lessor. The provisions of this Section 10(m) are subject to the exclusions of Section 10(b)(viii). Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Engine. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Engine, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be -60- 61 continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(b) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Engine, title to a replacement Engine, such replacement Engine (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(b) hereof, at least equal to, and to be in at least as good operating condition as, the Engine (assuming the Engine was maintained in accordance with the requirements of this Agreement, whether or not it is in fact so maintained), and (C) to be another IAE V2500 Engine of like model and equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988 or, at Lessee's option, an IAE engine of an improved model and in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that the Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Engine suffering the Event of Loss. For all purposes hereof, a replacement Engine shall be deemed part of the property leased hereunder and shall be deemed the "Engine" as defined herein. No Event of Loss resulting in replacement of the Engine under this Section 11(a)(i) shall result in any reduction of Rent. In addition to the foregoing, if Lessor so requests, as a condition to any substitution of the Engine under this Lease, Lessee shall use its best efforts to ensure that IAE acknowledges that such substitution shall not affect any product support or other agreements between or among IAE, Parent, Lessor or Lessee. -61- 62 (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss (or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Engine as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last day of the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, in effect on the last day of the Term, for each day from and including the last day of the Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Engine for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Engine due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Engine, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Engine suffering the Event of Loss. (b) Conveyance of Replacement Engine. Upon an Event of Loss with respect to the Engine, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine free of all Liens (it being -62- 63 understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens) and it is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine and that Lessor, and Indenture Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement engine to the same extent as with respect to the Engine prior to such replacement; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon -63- 64 consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged); (viii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer (including a Governmental Entity providing an indemnity in lieu thereof) with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(e) below, any payments (other than insurance or such indemnity proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such -64- 65 Stipulated Loss Value and other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Engine which is being replaced pursuant to Section 11(a)(i) and (b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (b) hereof, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Requisition for Use by Government with Respect to the Engine. Subject to Section 11(e) below, in the event of the requisition for use by a Governmental Entity of the Engine, Lessee will replace such Engine hereunder by complying with the terms of Section 11(a) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (e) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(c) or Section 11(d) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which -65- 66 Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability products, completed operation liability covering maintenance of aircraft, but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Engine and any airframe on which the Engine is installed (for purposes of this Section 12, any such airframe together with the Engine which is installed thereon shall be referred to as, the "Aircraft"), in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and similar type engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured or additional insured by any act or omission of Lessee or any other insured or additional insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured or additional insured of any breach or violation by Lessee or any other insured or additional insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such -66- 67 insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage), after notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Engine is located or operated and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, with respect to the Engine. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other IAE V2500 engines or similar type engines or similar-type aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft and spares hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the -67- 68 consent of Lessee) covering the Engine and/or the Aircraft, as the case may be, and "all-risk" coverage including transit insurance with respect to the Engine and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull and spares insurance reasonably acceptable to Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Engine or the Aircraft to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged; provided that Indenture Trustee shall not be obligated to request such insurance and shall not be liable for any failure to request such insurance. Anything herein to the contrary notwithstanding, at all times while the Engine is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Engine. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft or similar engines owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Engine, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns -68- 69 as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Engine or the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee, the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Engine, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section -69- 70 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses); (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and any other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to -70- 71 reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (b) hereof and of Section 15 hereof, as the case may be, with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts -71- 72 shall be paid to and held by Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Engine and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Engine complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris, if the relevant primary insurer shall have obtained reinsurance and such reinsurance (i) is on the same terms as the original insurance and includes the provisions required by this Agreement; (ii) -72- 73 provides in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contains a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] dated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Rein- surers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Engine or the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar engines or similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for similar engines as the engines in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until -73- 74 application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims (whether or not based on strict liability), damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, costs and expenses set forth in Section 21(j) hereof and reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee, from (and including) the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Engine or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistra- tion caused by the failure of the registered owner of the Engine to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations -74- 75 thereunder or to file the documentation necessary to continue FAA registration of the Engine), delivery, non- delivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Engine or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein or in the Operative Documents of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Engine or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of the Engine or such Part, or otherwise regardless of when such defect shall be discovered, whether or not the Engine or such Part is at the time in the possession of Lessee, and regardless of where the Engine or such Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide -75- 76 for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Engine), (v) an underlying act which occurs after the Engine has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full payment of the indemnities herein, Lessee shall be subro- gated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as -76- 77 and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Engine or any Part thereof, either in the air or on the ground, or which may be caused by any defect in the Engine or such Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of the Engine or such Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not the Engine or such Part is at the time in the possession of Lessee, and regardless of the location of the Engine at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents (except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the -77- 78 period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition), (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and, so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee -78- 79 has the right to control the defense thereof is materially prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section . Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Engine or of the residual value of the Engine. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease or any of the other Operative Documents and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising -79- 80 in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft and the Engine. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor cause -80- 81 any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture and in the Engine, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and re-recordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Engine, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Engine, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Engine and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in -81- 82 favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Engine or any other transfer or assignment by Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Section 16. Return of Engine and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Engine to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree. (b) Status Upon Return. Upon any Return Occasion hereunder, the Engine shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy engine by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act which are in effect on the date of such Return Occasion; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Engine to be operated under, and in full compliance with, an applicable standard certificate of airworthiness and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vi) in good and airworthy operating condition, and in the same condition as when delivered to -82- 83 Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (vii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Substitute Engine. In the event any engine not owned by Lessor shall be redelivered on any Return Occasion, without limiting Lessee's obligations under the Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engine or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on an Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engine, assuming the Engine was in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any such Engine at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens. (d) Records and Documents. Upon the return of the Engine, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Engine, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Engine and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Engine under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Engine under the Maintenance Program, in each case as Lessor -83- 84 may reasonably request, and all documentation with respect to the Engine set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Engine on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of Manufacturer or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Engine, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing; such identification shall be sufficient to allow traceability of such components and assemblies from the date on which such components and assemblies were manufactured to the date on which such identification is made, and to measure the service histories, accumulated cycles or flight hours as applicable and remaining service lives in each engine, including but not limited to the Engine, in which such components and assemblies have been used. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an engine which has been operating in regulated commercial air service, shall be delivered to Lessor with the Engine. Any documents or records required to be delivered hereunder shall be in English. -84- 85 (e) Condition of Engine. Upon any Return Occasion, Lessee shall return such Engine to Lessor in such condition that the Engine shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Engine available to Lessor at the location where the designated check or checks required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Engine and Parts structure and parts, at Lessee's expense (excluding compensation to representatives of Lessor), in order to verify that the condition of such Engine complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such check or checks and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such checks are being performed and shall have such duration as to permit the opening of any areas of the Engine which are customarily necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Engine and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to the Engine undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations hereunder continued, on a daily basis until the Final Inspection shall have been concluded and Lessee shall pay Rent during any such extension in an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value during such extension shall equal the Stipulated Loss Value on the last day of the Basic Term or Renewal Term, as the case may be); provided, however, that Lessee shall not be required to pay Rent with respect to the Engine during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except -85- 86 that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Engine Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Engine pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Engine Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Engine. Such Records and Documents shall be sufficient to enable Lessor to trace the service history, accumulated cycles or flight hours as applicable and remaining service life of the Engine, including but not limited to a listing of each airframe on which the Engine has been installed. (h) Corrections and Subsequent Corrections. To the extent that the Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as the Engine is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of the Engine and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of the Engine, at commercial rates then charged by the Person selected by Lessor to perform such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. Nothing set forth in this paragraph shall constitute a limitation on Lessor's or Owner Participant's ability to recover from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the return of the Engine at the time, in the place and in the condition as specified in this Section 16 and Exhibit E hereto. (i) [Intentionally Left Blank]. (j) Exportation of the Engine. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably -86- 87 request to assist Lessor in obtaining any required documents in relation to the export of the Engine from the United States (including, without limitation, a valid and subsisting export license). (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Engine which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Engine for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Engine after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Engine and the records relating thereto to the extent it does not unreasonably interfere with the operation or maintenance of the Engine or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days, after the date on which such -87- 88 payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days, after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto; provided that any failure of Lessee to pay to Lessor or Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless Lessor delivers notice to Lessee; or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Engine outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Engine; or (c) Any representation or warranty made by Lessee herein or in the Refunding Agreement or in any certificate furnished by Lessee in connection herewith or therewith is or was incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or the Refunding Agreement, and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c), or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary -88- 89 petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within ninety (90) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of ninety (90) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or -89- 90 (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to the Engine as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's cost and expense, immediately return, and Lessee hereby agrees that it shall return promptly, the Engine to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Engine) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if the Engine were being returned at the end of the Term hereof with respect to the Engine. In addition, Lessor or Lessor's agent, at its option and to the extent permitted by applicable Law, may but shall not be obligated to enter upon the premises where the Engine is located to take immediate possession of and, at Lessor's option, remove the same by summary proceedings or otherwise, all without liability accruing to Lessor or Lessor's agent for or by reason of such entry or taking of possession or removal whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. -90- 91 (b) With or without taking possession thereof, sell or cause to be sold, the Engine or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Engine, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Engine to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Engine as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or Renewal Rent Payment Date, an amount equal to the Basic Rent or the Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Engine for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Engine, or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent due to and including the -91- 92 date of sale, plus the amount by which the Stipulated Loss Value of the Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In lieu of exercising its rights under paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in advance for the period on and after the Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such Engine due and unpaid for any period prior to and including, and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss Value for the Engine computed as of such Stipulated Loss Value Date; and upon such payment of liquidated damages and the payment of all other Rent then due hereunder and the discharge of the Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without recourse or warranty (except as to the absence of Lessor's Liens and the Lien of the Indenture), all right, title and interest of Lessor in and to the Engine to Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and deliver such documents evidencing such transfer and take such further action as Lessee shall reasonably request. (f) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the or Engine under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such or Engine, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Engine due after the time of reletting) any unpaid Rent for such Engine due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Engine which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for the Engine would have expired but for Lessee's default, discounted periodically (equal to -92- 93 installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (g) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Engine shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. (h) Lessor may exercise any other right or remedy which may be available to it under applicable laws, or may proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above, until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Engine in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Engine in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. -93- 94 In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's property in repossessing and holding the Engine or Part, except for direct damages caused by Lessor's gross negligence or willful misconduct, and (iv) shall have the right to maintain possession of and dispose of the Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Engine or Part for sale or lease, advertising the sale or lease of the Engine or Part and selling or releasing the Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Engine or Part pursuant to this Section , Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor -94- 95 shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d), (e) or (f) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Engine leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Engine, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. The provisions of this Section 18 shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. Section 19. Security for Obligations. Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and -95- 96 perfected security interest in all of Lessor's right, title and interest in and to the Engine in favor of Indenture Trustee. Lessee hereby consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) (other than Expected Rights) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. -96- 97 Section 20. Renewal Option. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Engine for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, in no event less than the greater of 120% of the "fair market sales value" of the Engine as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. -97- 98 Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, each of Lessor and Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Engine or any Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Engine for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices and instructions between Lessor and Lessee required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). All notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee -98- 99 (until such time as the Lien of the Indenture is discharged) and to Owner Participant, at such address as Owner Participant and Indenture Trustee, respectively, may designate from time to time. All notices and instructions hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Engine hereunder, and all rents, revenues, profits and income therefrom, in accordance with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it, provided that Lessor and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through -99- 100 Trustee, Note Holder or any other Person lawfully, claiming by or through them, and provided further, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. -100- 101 (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications hereof or thereof, or waivers or consents hereunder or thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the Financing Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft engines similarly situated to Lessor. (l) [Intentionally Left Blank]. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United States District Court for the Southern District of New York. Each of Lessee and Lessor represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee or Lessor hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, it hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to -101- 102 the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Each of Lessee and Lessor hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee or Lessor as from time to time may be designated by Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns (as applicable). Final (after all appeals) judgment (the enforcement of which has not been stayed) against either Lessee or Lessor obtained in any suit originally brought in the court of the State of New York in New York County or in the United States District of New York shall be conclusive, and, to the extent permitted by applicable Law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings, against Lessee or Lessor, as the case may be, or any of their assets in the courts of any country or place where such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this -102- 103 Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Engine for all purposes hereof without the necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease, as amended and restated by this Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] (and as otherwise extended, amended, modified, renewed or supplemented), shall be governed by Article 2-A of the Uniform Commercial Code of New York. -103- 104 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by its duly authorized officer as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:______________________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:______________________________________ Title: -104- 105 The undersigned acknowledges receipt of this original counterpart of the foregoing Lease on this ____ day of November, 1996 and consent to the terms hereof. FLEET NATIONAL BANK, not in its individual capacity, but solely as Indenture Trustee By:_________________________________________ Title: -105- 106 TABLE OF CONTENTS
Page ---- Section 1. Definitions...................................................... 1 Section 2. Agreement to Lease............................................... 19 Section 3. Delivery and Acceptance; Term.................................... 19 (a) Time of Delivery......................................... 19 (b) [Intentionally Left Blank.].............................. 19 (c) Acceptance of Engine..................................... 19 (d) Term of Lease............................................ 20 Section 4. Rent............................................................. 20 (a) Rent..................................................... 20 (b) Minimum Payments......................................... 20 (c) Date, Place and Method of Payment........................ 21 (d) Prohibition Against Setoff, Counterclaim, Etc........................................ 21 Section 5. Representations, Warranties and Covenants........................ 23 (a) Warranties and Disclaimer of Warranties............................................... 23 (b) Representations and Warranties of Lessor. .............................................. 24 (c) No Amendments to Financing Documents..................... 24 (d) Suppliers' Warranties.................................... 25 Section 6. Possession and Use............................................... 25 (a) Possession............................................... 25 (b) [Intentionally Left Blank]............................... 32 (c) Lawful Insured Operations................................ 32 (d) Maintenance.............................................. 33 (e) Registration and Insignia................................ 35 Section 7. Inspection....................................................... 35 Section 8. Additional Covenants of Lessee................................... 36 (a) Financial Information.................................... 36 (b) Maintenance of Corporate Existence....................... 38 (c) Maintenance of Status.................................... 38 (d) Payment of Taxes......................................... 38 (e) Consolidation, Merger, Etc............................... 39 (f) Information.............................................. 40 (g) Place of Business........................................ 40 (h) Certain Limitations on Use............................... 40 (i) Section 1110............................................. 41 (j) Permits and Licenses..................................... 41 (k) Security Opinion; Annual Certificate..................... 41 (l) Letter of Credit......................................... 43
107
Page ---- Section 9. Replacement of Parts; Alterations, Modifications and Additions...................................... 45 (a) Replacement of Parts..................................... 45 (b) Alterations, Modifications and Additions................................................ 46 (c) Pooling.................................................. 48 Section 10.General Tax Indemnity............................................ 49 (a) Indemnity................................................ 49 (b) Exclusions............................................... 51 (c) Covered Income Tax....................................... 53 (d) Reports and Returns...................................... 55 (e) After-Tax Basis.......................................... 55 (f) Tax Benefit.............................................. 56 (g) Payment.................................................. 56 (h) Contest.................................................. 57 (i) Refund................................................... 59 (j) Diligence................................................ 59 (k) Affiliated Group......................................... 59 (l) Verification............................................. 60 (m) Survival................................................. 60 Section 11.Loss, Damage and Requisition..................................... 60 (a) Event of Loss with Respect to the Engine............................................... 60 (b) Conveyance of Replacement Engine......................... 62 (c) Application of Proceeds and Payments..................... 64 (d) Requisition for Use by Government with Respect to the Engine............................... 65 (e) Application in Default................................... 65 Section 12.Insurance........................................................ 66 (a) Public Liability and Property Damage Insurance......................................... 66 (b) Insurance Against Loss or Damage......................... 67 (c) Application of Insurance Proceeds for an Event of Loss..................................... 70 (d) Application of Insurance Proceeds for Other than an Event of Loss.............................. 71 (e) Application in Default................................... 71 (f) Certificates............................................. 72 (g) Reinsurance.............................................. 72 (h) Storage.................................................. 73 (i) Amounts Held............................................. 73 (j) After the Term........................................... 74 (k) Governmental Indemnity................................... 74 Section 13.General Indemnity................................................ 74
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Page ---- Section 14.Liens............................................................. 79 Section 15.Protection of Title and Further Assurances........................................................ 80 Section 16.Return of Engine and Records...................................... 82 (a) Return.................................................... 82 (b) Status Upon Return........................................ 82 (c) Substitute Engine......................................... 83 (d) Records and Documents..................................... 83 (e) Condition of Engine....................................... 85 (f) Final Inspection.......................................... 85 (g) Engine Records and Documents.............................. 86 (h) Corrections and Subsequent Corrections............................................... 86 (i) [Intentionally Left Blank]................................ 86 (j) Exportation of the Engine................................. 86 (k) Service Bulletin and Modification Kits...................................................... 87 (l) Storage Upon Return....................................... 87 (m) Resale/Release Cooperation................................ 87 Section 17.Events of Default................................................. 87 Section 18.Remedies.......................................................... 90 Section 19.Security for Obligations.......................................... 95 Section 20.Renewal Option.................................................... 97 Renewal Option.................................................... 97 Section 21.Miscellaneous..................................................... 98 (a) Severability, Amendment, and Construction................. 98 (b) GOVERNING LAW............................................. 98 (c) Notices................................................... 98 (d) Lessor's Right to Perform for Lessee...................... 99 (e) Counterparts.............................................. 99 (f) Quiet Enjoyment........................................... 99 (g) Brokers...................................................100 (h) Investment of Funds.......................................100 (i) Entire Agreement; Amendment...............................100 (j) Expenses..................................................101 (k) Federal Bankruptcy Code...................................101 (l) [Intentionally Left Blank]................................101 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial..........................101 (n) Limitation on Recourse....................................103 (o) Successor Trustee.........................................103
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Page ---- (p) Article 2-A of the UCC...................................103
ANNEXES Annex A - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Engine Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 2 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Permitted Sublessee Assignment Consent Exhibit G - [Intentionally Left Blank] Exhibit H - [Intentionally Left Blank] Exhibit I - [Intentionally Left Blank] Exhibit J - [Intentionally Left Blank] Exhibit K - Form of Engine Status Report -iv- EX-4.32 33 RESTATED ENGINE LEASE AGREEMENT[GPA 1991 AWA-E3] 1 EXHIBIT 4.32 AMENDED AND RESTATED ENGINE LEASE AGREEMENT THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT dated as of March 15, 1991 and amended and restated as of November 26, 1996 is entered into between WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Owner Trustee under a Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as amended, and with its principal place of business at Rodney Square North, Wilmington, Delaware 19890 (together with its successors and permitted assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors and permitted assigns, "Lessee"). W I T N E S S E T H: WHEREAS, Lessor and Lessee desire to amend and, solely for the convenience of the parties, restate in its entirety the Original Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter defined) as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, Lessor and Lessee agree as follows: Section 1. Definitions. The following terms shall have the following respective meanings for all purposes of this Lease (including the Recitals) and shall be equally applicable to both the singular and the plural forms of the terms defined herein: As used herein, the terms "Assigned Sublease", "Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement", "Restatement Date", "Sublease Assignment", "Trust Company", and "Trust Indenture Estate" shall have the meanings specified in the Indenture; the terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and "Subordination Agent" shall have the meanings specified in the Intercreditor Agreement (as 2 defined in the Pass Through Trust Agreement); and the term "Lease Amendment No. 1" shall have the meaning specified in the Refunding Agreement. "Affiliate" shall mean, with respect to any specified Person, any other Person which, directly or indirectly, owns or controls, is controlled by or is under common control with such specified Person. Control will be deemed to exist based on (i) ownership of 25% or more of the voting securities of a Person or (ii) the power to direct or elect or cause the direction or election of the management and policies of a Person whether by contract or otherwise. "Appraisal Procedure" shall mean the following procedure for determining the "fair market sales value" or "fair market rental value" of the Engine or a Part. Except as provided in Section 18, "fair market sales value" or "fair market rental value" shall mean the value that would be obtained in an arm's-length transaction between an informed and willing seller or lessor, as the case may be, and an informed and willing buyer or lessee, as the case may be, both under no compulsion to sell and purchase or to lease (and other than a lessee in possession or a used equipment scrap dealer), as the case may be, as such value is determined by an appraisal which assumes: (i) that the Engine or such Part is unencumbered by this Lease (or any sublease) or any of the other Operative Documents or any of the Financing Documents and the terms thereof; (ii) that the Engine or such Part has been maintained in all respects in accordance with the terms of this Lease (whether or not in fact in such condition), (iii) that the Engine or such Part meets the return conditions specified in Section 16 and Exhibit E (whether or not in fact meeting such conditions) and (iv) that Lessee has removed the Removable Parts entitled to be removed under Section 9(b) (it being agreed that no such removal is permitted in connection with an appraisal pursuant to Section 18) and replaced any part which was removed from the Engine as a result of such Removable Part being installed; provided, however, that costs of removal from the location of current use and costs of sale shall not be a consideration in determining such value except in connection with any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18; and provided, further, that any determination of "fair market sales value" or "fair market rental value" pursuant to Section 18 shall be on an "as is, where is" basis in its actual condition and location subject to this Lease and any sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal pursuant to Section 18 in which case only Lessor shall select such appraiser (which -2- 3 appraiser does not have to be acceptable to Lessee), select an independent nationally-recognized aircraft appraiser, mutually acceptable to each of them, who shall make the determination as to the "fair market sales value" or "fair market rental value" of the Engine or such Part for which such appraisal is to be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within ten (10) days, then each of Lessor and Lessee shall select an appraiser and such determination shall be made by such appraisers (if either party shall fail to appoint an appraiser within ten (10) days after notice from the other party of the selection of its appraiser, then the appraisal made by the other party's appraiser shall be determinative). If the two appraisers chosen pursuant to the preceding sentence fail to agree upon a determination of the "fair market sales value" or "fair market rental value" of the Engine or such Part within twenty (20) days after their appointment, then such appraisers shall mutually choose a third appraiser within ten (10) days thereafter, provided that if such appraisers fail to mutually choose a third appraiser within said 10-day period, such appointment shall be made by the American Arbitration Association (or any successor) in New York, New York, and the three appraisers so chosen shall each make such determination. The appraisal determined by each of the three appraisers chosen pursuant to the preceding sentence shall be averaged and the appraisal furthest from the average of the three appraisals shall be disregarded. The appraisal determined by each of the two remaining appraisers shall be averaged and such average shall be the appraised "fair market sales value" or "fair market rental value" of the Engine or such Part. Lessee shall bear all the fees and expenses of the Appraisal Procedure. "Approved Broker" shall mean any reputable insurance broker of recognized responsibility and standing experienced in aircraft insurance. "Approved Insurers" shall mean any reputable and creditworthy insurance company of recognized responsibility and standing experienced in aircraft insurance. "Basic Rent" for the Engine shall mean the Basic Rent specified in Exhibit C and payable throughout the Basic Term for the Engine pursuant to Section 4(a)(i). "Basic Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a Business Day, any payment -3- 4 due on such Basic Rent Payment Date shall be made on the next succeeding Business Day. "Basic Term" shall mean the period specified in Lease Supplement No. 2. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York or Hartford, Connecticut are authorized or required by Law to be closed. "Certificated Air Carrier" shall mean any corporation (except the United States Government) domiciled in the United States of America and holding a Certificate of Convenience and Necessity issued under Section 41102(a) of the Federal Aviation Act by the Department of Transportation or any predecessor or successor agency thereto, or, in the event such Certificates shall no longer be issued, any corporation (except the United States Government) domiciled in the United States of America and legally engaged in the business of transporting for hire passengers or cargo by air predominantly to, from or between points within the United States of America, and, in either event, operating commercial jet aircraft, which also is a citizen of the United States (as defined in Section 40102 of the Federal Aviation Act) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government and authorized under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or substitute program of the United States Government. "Claims" shall have the meaning specified in Section 13. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Commonly Controlled Person" shall mean an entity, whether or not incorporated, which is under common control with Lessee within the meaning of Section 414(b) or (c) of the Code. -4- 5 "Default" shall mean an event or condition which would constitute an Event of Default with the lapse of time or the giving of notice or both. "Delivery Date" shall mean March 27, 1991 being the date the Engine was delivered to and accepted by the Original Head Lessee as Lessee hereunder for all purposes of this Lease. "$" and "dollars" shall mean the lawful currency of the United States of America. "Engine" shall mean (i) the IAE Model V2500-A1 engine listed by manufacturer's serial number in Lease Supplement No. 1, (ii) Parts or components thereof, (iii) ancillary equipment or devices furnished therewith under this Lease (including any separate equipment described on one or more Lease Supplements hereto), (iv) the Engine Records and Documents and all other manuals and records with respect to such Engine, and (v) all substitutions, replacements and renewals of any and all thereof, including but not limited to, any replacement engine which may from time to time be substituted, pursuant to Section 6(a) or 11(a), for the Engine leased hereunder; together in each case with any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto after removal from such Engine shall remain vested in Lessor in accordance with the terms of Section 9 hereof. Except as otherwise set forth herein, at such time as a replacement engine shall be so substituted and leased hereunder and the replacement Engine shall have been subjected to the Lien of the Indenture (if the Lien of the Indenture has not been discharged), such replaced Engine shall cease to be an Engine hereunder. "Engine Records and Documents" shall mean the items identified in Exhibit B hereto, all of which shall be maintained in the English language. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, as from time to time in effect. "Event of Default" shall have the meaning specified in any one or more clauses in Section 17. "Event of Loss" shall mean any of the following events with respect to the Engine: (a) loss of such property or the use thereof due to theft or disappearance for a period in excess of sixty (60) consecutive days, but in no event later than the last day of the Term; -5- 6 (b) destruction or damage of such property that renders repair uneconomic or such property permanently unfit for normal use by Lessee (or, if a Permitted Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss or disappearance of or damage to or destruction of such property which results in an insurance settlement with respect to such property on the basis of an actual or constructive total loss; (d) the condemnation, confiscation, appropriation, seizure or requisition of title to any such property by any Governmental Entity which results in the loss of title by Lessor for ten (10) days or more but excluding requisition for use or hire which does not involve requisition of title; (e) the condemnation, confiscation, appropriation, seizure or requisition of the use of any such property by any Governmental Entity (other than a requisition for use by the federal government of the United States or any instrumentality or agency thereof bearing the full faith and credit of the United States of America), which in any such case shall have resulted in the loss of possession thereof by Lessee for a period in excess of the earlier of ninety (90) consecutive days or the last day of the Term (or for such shorter period ending on the date which is the next Business Day after the date of receipt of an insurance settlement with respect to such property on the basis of a total loss); (f) the requisition for use of such property by the federal government of the United States or any agency or instrumentality thereof bearing the full faith and credit of the United States of America, which purports to or does continue beyond the Term; (g) as a result of any law, rule, regulation, order or other action by the FAA, the Department of Transportation or any other Governmental Entity having jurisdiction, the use of the Engine in the normal course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted Sublessee's) business of air transportation of passengers shall have been prohibited for a period of six (6) consecutive months, unless Lessee (or the Permitted Sublessee), prior to the expiration of such six-month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit such normal use of such item of equipment by Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall have been so prohibited by any such Governmental Entity for a period of twelve (12) consecutive months or is continuing beyond the last day of the Term; or (h) as otherwise provided herein. "Expiration Date" shall mean the date specified in Lease Supplement No. 2, on which date the Basic Term of this Lease shall expire. -6- 7 "FAA" shall mean the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Federal Aviation Act" shall mean the sections of title 49 of the United States Code relating to aviation, as amended and in effect from time to time, or any similar legislation of the United States of America enacted in substitution or replacement thereof. "Financials" shall mean Lessee's most recent fiscal year-end audited consolidated balance sheet and statements of income and cash flow for the period then ending, copies of which for the fiscal year ending December 31, 1995, have been provided to Lessor prior to the date hereof. "Financing Documents" shall mean the Lease Agreement, each Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each Pass Through Trust Agreement and each supplement thereto and any certificate delivered or entered into in accordance with the foregoing, as amended, supplemented or otherwise modified. "Foreign Air Carrier" shall mean any air carrier listed in Exhibit F-1, as amended, supplemented or otherwise modified from time to time, whose principal place of business and legal domicile at the time of entering into the applicable sublease is located in a country listed on Exhibit F-2, as amended, supplemented or otherwise modified from time to time, and not prohibited by the terms of the insurance then in effect, with which the United States has diplomatic or, such as in the case of Taiwan, similar relations, in each case which is obligated under the applicable sublease to perform all maintenance required by applicable foreign governmental standards made mandatory to the Engine by such jurisdiction and, to the extent not inconsistent therewith, all FAA-airworthiness directives and other requirements made mandatory to the Engine by the FAA. "GAAP" shall mean United States generally accepted accounting principles and practices consistently applied as in effect from time to time, which shall include the official interpretations thereof by the Financial Accounting Standards Board. All accounting terms not otherwise defined herein shall have the meanings assigned to such terms in accordance with GAAP. -7- 8 "Governmental Entity" shall mean and include (i) any national government, political subdivision thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, or agency of any thereof, however constituted; and (iii) any association, organization, or institution of which any entity described in (i) or (ii) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the Engine or its operations. "GPA Aircraft" shall mean any aircraft which is the subject of any of the Other Leases. "Head Lessor's Lien" shall mean a "Lessor's Lien" under and as defined in the Original Head Lease. "IAE" shall mean IAE International Aero Engines AG, a company organized and existing under the laws of Switzerland. "Indemnitee" shall mean Lessor (in its individual capacity and as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as trustee under the Indenture) and each Pass Through Trust, each Pass Through Trustee (in its individual capacity and as trustee under the Pass Through Trusts), the Subordination Agent and each Liquidity Provider, their respective successors and permitted assigns and (and, in the case of a permitted assign of Owner Participant that is a partnership, the partners of such partnership), and any combination thereof and their respective officers, directors, agents, servants, employees, subsidiaries, Affiliates and shareholders. "Indenture" shall mean the Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, and amended and restated as of November 26, 1996, as the same may be further amended, supplemented or modified from time to time, between Indenture Trustee and Lessor. The term "Indenture" shall also include the Indenture Supplements entered into pursuant to the terms of the Indenture. "Indenture Trustee" shall mean the bank or trust company serving as Indenture Trustee under the Indenture, and its successors and assigns. -8- 9 "Interest Rate" shall mean (i) with respect to the portion of any payment of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder, a per annum rate of interest equal to the Past Due Rate applicable thereto under and as defined in the Indenture computed on the basis of a 360-day year and twelve 30-day months and (ii) with respect to any other amount, a per annum rate of interest equal to the sum of the rate of interest publicly announced by Citibank, N.A., at its principal office in New York City, as its prime or similar base rate from time to time in effect from the date the amount becomes due to the date it is paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case may be, and actual number of days elapsed. "Law" shall mean and include (i) any statute, rule, decree, constitution, regulation, order, judgment or other directive of any Governmental Entity; (ii) any treaty, pact, compact or other agreement to which any Governmental Entity is a signatory or party; (iii) any judicial or administrative interpretations of the application of any Law described in (i) or (ii) above; and (iv) except where expressly excluded herein, any amendment or revision of any Law described in (i), (ii), or (iii) above. "Lease Agreement," "this Lease Agreement," "this Lease," "this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall mean this Lease as originally executed and as amended, supplemented or otherwise modified from time to time, including, without limitation, by one or more Lease Supplements, as a whole and not to any particular Section or other subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this Lease, as so amended, supplemented or modified, unless expressly provided to the contrary. "Lease Identification" shall have the meaning set forth in Section 6(e) hereto. "Lease Supplement" shall mean Lease Supplement No. 1 and Lease Supplement No. 2 and each subsequent Lease Supplement entered into hereunder. "Lease Supplement No. 1" shall mean Lease Supplement [GPA 1991 AWA-E3] No. 1 dated March 27, 1991 between Lessor and Original Head Lessee, as Lessee. "Lease Supplement No. 2" shall mean Lease Supplement [GPA 1991 AWA-E3] No. 2, substantially in the -9- 10 form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the Restatement Date for the purpose of confirming the leasing of the Engine hereunder. "Lenders' Lien" shall mean any Lien or disposition of title attributable to Indenture Trustee in its individual capacity (and not as Indenture Trustee) on or in respect of (as the case may be) the Engine or any other portion of the Trust Estate or the Trust Indenture Estate arising as a result of (i) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) not related to its interest in the Engine or the administration of the Trust Estate or the Trust Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) not contemplated hereunder or under the other Operative Documents, or acts or omissions of Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are in violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) which are excluded from indemnification by Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and not as Indenture Trustee) arising out of the voluntary or involuntary transfer by Indenture Trustee in its individual capacity (and not as Indenture Trustee) of all or any portion of its interest in the Engine, the Trust Estate, the Trust Indenture Estate or the Operative Documents (except a Claim resulting from the exercise of remedies under and in accordance with the Indenture or for a transfer provided for in the Operative Documents). "Lessee" shall have the meaning set forth in the Recitals hereto. "Lessor" shall have the meaning set forth in the Recitals hereto. "Lessor's Lien" shall mean any Lien or disposition of title affecting the Engine or any Part arising as a result of (i) any claim against Lessor, Owner Participant, Trust Company or any of their Affiliates not related to the transactions contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company or any of their Affiliates not expressly contemplated by this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents or not permitted without consent (which consent has not been -10- 11 granted) by any party hereto or thereto or that is in violation of any term of this Lease or the other Operative Documents, the Financing Documents or the Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner Participant or any of their Affiliates or the consolidated group of taxpayers of which any of them is a member which are not to be indemnified against by Lessee under the Operative Documents, the Purchase Documents or the Financing Documents or by Original Head Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company, Owner Participant or Lessor or any of their Affiliates arising out of the transfer of all or any part of their respective interest in the Engine, the Trust Estate, the Operative Documents or the Financing Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except Liens resulting from a transfer not permitted by such Section ) or 20 of this Lease or pursuant to Section 10 of the Refunding Agreement; provided, however, that there shall be excluded from this definition and Lessor shall not be required to remove any Lien which would otherwise constitute a Lessor's Lien, if it is being diligently contested in good faith so long as neither such proceedings nor Lien involves a material danger of the sale, forfeiture or loss of the Engine or adversely affects Lessee's rights under Section 21(f); and provided, further, that Lessor's Liens shall not include the Lien of the Indenture or Lenders' Liens. "Lien" shall mean any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Lien of the Indenture" shall mean the Lien created by the Indenture on the Trust Indenture Estate. "Maintenance Program" shall mean (i) the America West Maintenance Program approved by the FAA for America West Airbus model A320-231 aircraft which is applicable to IAE AG V2500 Engines in effect on the date hereof or as modified with the approval of the FAA without affecting, or any other FAA approved maintenance program which does not affect, the return condition standards set forth in Section 16 and Exhibit E or (ii) if the Engine is subject to a Permitted Sublease to a Foreign Air Carrier any other FAA approved maintenance program for the Engine which is approved by the aviation authority of the country of -11- 12 registry and complies with the requirements applicable to maintenance of the Engine contained in the definition of Foreign Air Carrier. The Maintenance Program shall encompass scheduled maintenance, condition monitored maintenance, and on-condition maintenance of the Engine, including, but not limited to, servicing, testing, preventive maintenance, repairs, structural inspections, structure life improvements, system checks, overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives, and corrosion control inspections and treatments. All modifications and supplements to the Maintenance Program shall be provided to Lessor upon its reasonable request and Lessor shall be given reasonable access to the Maintenance Program upon its request. "Manufacturer" shall mean IAE in its capacity as manufacturer of the Engine, together with any subcontractor or supplier thereof. "Maximum Foreign Use Percentage" shall have the meaning specified in Exhibit C. "Mortgage Convention" shall mean the Convention for the International Recognition of Rights in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, and amended from time to time, but excluding the terms of any adhesion thereto or ratification thereof containing reservations to which the United States of America does not accede. "Net Worth" shall mean, with respect to any Person, such Person's stockholders' equity minus any intangible assets. "Operative Documents" shall mean this Lease, each Lease Supplement, any sublease, the Tax Indemnification Agreement, the Financing Documents, that certain letter dated as of the Restatement Date and any certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Original Head Lease" shall mean this Engine Lease Agreement [GPA 1991 AWA-E3], with respect to the Aircraft, dated as of March 15, 1991, between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended, supplemented or otherwise modified and as in effect immediately prior to the Restatement Date, as more particularly described in Annex I attached hereto. "Original Head Lease Tax Indemnification Agreement" shall mean the Head Lease Tax Indemnification -12- 13 Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, and amended and restated as of the Restatement Date between the Original Head Lessee and Owner Participant, as amended, supplemented or otherwise modified from time to time. "Original Head Lessee" shall mean GPA Leasing USA I, Inc., a Connecticut corporation. "Original Sublease" shall mean the Initial Sublease (as defined in the Original Head Lease) as in effect immediately prior to the Restatement Date. "Other Leases" shall mean the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and America West Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, each as amended, supplemented or otherwise modified from time to time. "Other Letters of Credit" shall mean any and all letters of credit pursuant to Section 8(l) of the Other Leases. "Owner Participant" shall mean ____________________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. -13- 14 "Owner Trustee" shall mean Wilmington Trust Company, as Owner Trustee under the Trust Agreement, and its successors and assigns. "Parent" shall mean GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Participation Agreement" shall mean the Participation Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, among Original Head Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" named therein, as amended by the Letter Agreement dated as of July 29, 1993, as the same may be further amended, supplemented or otherwise modified from time to time and as in effect immediately prior to the Restatement Date. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature which may now or from time to time be incorporated or installed in or attached to or were provided by the Manufacturer with the Engine or so long as title thereto shall remain vested in Lessor in accordance with the terms of Section 9 hereof after removal from such Engine. Except as otherwise set forth herein, at such time as a replacement part shall be substituted for a Part in accordance with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder. "Payment Location" shall have the meaning set forth in Exhibit C, as the same may be changed from time to time by Lessor as provided in Section 4(c). "Permitted Lien" shall mean any Lien referred to in clauses (i) through (vii) of the first sentence of Section 14 hereof. "Permitted Sublease" shall have the meaning specified in Section 6(a)(iii)(1). "Permitted Sublessee" shall mean a Certificated Air Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United States Government or an agency or instrumentality thereof which bears the full faith and credit of the United States of America or (c) any other Person approved in writing by the Owner Participant and the Indenture Trustee. "Person" shall mean and include any individual person, corporation, partnership, firm, joint stock company, -14- 15 joint venture, trust, estate, unincorporated organization, association, Governmental Entity, or organization or association of which any of the above is a member or a participant. "Purchase Agreement" shall mean the Engine Sale Agreement dated as of September 28, 1990, among IAE and Original Head Lessee, as the same may be amended, supplemented or otherwise modified to the extent permitted by the terms thereof from time to time. "Purchase Documents" shall mean the Purchase Agreement and any other agreement, document or certificate delivered or entered into pursuant to the foregoing, as amended, supplemented or otherwise modified. "Removable Part" shall have the meaning set forth in Section 9(b). "Renewal Rent" shall mean the rent payable pursuant to Section 20. "Renewal Rent Payment Date" shall mean each day determined in accordance with Exhibit C upon which a payment of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a day which is not a Business Day, any payment due on such Renewal Rent Payment Date shall be made on the next succeeding Business Day. "Renewal Term" shall mean the period described in Section 20 following the end of the Basic Term if Lessee shall have exercised its renewal option in accordance with Section 20. "Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and Supplemental Rent, collectively. "Replacement Engine" shall have the meanings specified in accordance with its description in Section 11. "Replacement Period" shall have the meaning specified in Section 11. "Responsible Officer" shall mean, with respect to Lessee, any of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or Controller. "Restricted Use Period" shall have the meaning specified in Exhibit C. -15- 16 "Return Occasion" shall mean the event that occurs when possession of the Engine is to be returned from Lessee to Lessor at the end of the Term of this Lease or upon Lessor taking possession pursuant to Section 18 or for any other reason. "Shipping Stand" shall mean the cradle designed to hold an engine which has a suitable shock mounting system to allow the engine to be transported by truck or other vehicle without damage, listed by part number and manufacturer's serial number in Lease Supplement No. 1. "Specified Investments" shall mean (i) direct obligations of the United States Government, the obligations of which bear the full faith and credit of the United States; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by any commercial bank incorporated under the laws of the United States or one of the States thereof (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) having a combined capital surplus and undivided income of at least $750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or deposits at any given time for any one bank) with any financial institution having combined capital and fully collateralized by an obligation of the type described in clauses (i) through (iii) as collateral pursuant to which an entity referred to in clause (iii) above or another financial institution having a net worth of at least $750,000,000 and having a rating of "B" or better from the Thompson BankWatch, Inc. is obligated to repurchase any such obligation not later than ninety (90) days after the purchase of any such obligation; and (v) money market funds which invest solely in obligations described in clause (i); provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the date which is ninety (90) days from the date of purchase thereof. "Stipulated Loss Value" shall mean as of the applicable date during the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the amount described in Section 20(ii) (it being understood and agreed that the amounts set forth in Exhibit A take into account fully the amount and application of each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date (other than -16- 17 a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is to be made in respect thereof except as expressly provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the event that it is necessary to determine a separate Stipulated Loss Value for the Engine, such Stipulated Loss Value shall be based on the ratio that the original cost to Lessor of the Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for the Engine. "Stipulated Loss Value Date" shall mean each monthly date listed, or with respect to any Renewal Term determined as set forth, on Exhibit A hereto. "Supplemental Rent" shall mean any and all amounts, liabilities and obligations other than Basic Rent and Renewal Rent which Lessee assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under any other Operative Document, including, without limitation, (i) any payment of Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount equal to average daily Basic Rent or Renewal Rent in connection with an extension of the Term of this Lease as a result of (a) an incipient Event of Loss and the operation of Section 11 hereof or (b) the need to correct any failure of the Engine to satisfy the requirements of Section 16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due to the Owner Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture Trustee in respect of fees or expenses as provided in the Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to the Subordination Agent in respect of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount specified in clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent permitted by applicable Law, interest at the Interest Rate calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this definition of "Supplemental Rent", not paid on the due date thereof for the period for which the same shall be overdue and (2) on any Supplemental Rent not paid when due hereunder from and including the due date until the same shall be paid. As used herein, "Pro Rata Share" means as of any date of determination a fraction the numerator of which -17- 18 is the aggregate Principal Amount then outstanding of the Equipment Notes issued under the Indenture and the denominator of which is the aggregate principal balance then outstanding of all "equipment notes" issued under the Indentures (as defined in the Intercreditor Agreement). "Tax Indemnification Agreement" shall mean the Amended and Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-E3], dated as of December 12, 1990, and as amended and restated as of November 26, 1996, between Original Head Lessee and Lessee, as the same may be amended, supplemented or otherwise modified from time to time. "Taxes" shall mean any and all fees (including, without limitation, license and registration fees), taxes (including, without limitation, sales, personal property (tangible and intangible), transfer, fuel, leasing, use, occupational, value added, excess profits, excise, gross receipts, franchise, stamp, and income taxes), levies, imposts, withholdings, assessments, or other taxes, duties or charges of any nature whatsoever, together with any penalties, fines, additions to tax charges or interest thereon or computed with reference thereto. "Taxing Authority" shall have the meaning specified in Section 10(a). "Term" shall mean, collectively, the Basic Term specified in Lease Supplement No. 2 and the Renewal Term, if Lessee extends the Term in accordance with Section 20, in either case, as extended or deemed extended as a result of the occurrence of an event described in clause (iii) to the definition of "Supplemental Rent" in this Lease, for which the Engine is leased hereunder pursuant to Section 2. "Trust Agreement" shall mean the Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991 as amended by Trust Supplement No. 1, and as further amended by Trust Supplement No. 2, between Lessor, in its individual capacity, and Owner Participant, as beneficiary, as the same may be amended, supplemented or otherwise modified from time to time. The term "Trust Agreement" shall also include each Trust Supplement. "Trust Estate" shall have the meaning specified in the Trust Agreement. "Trust Supplement" shall mean Trust Supplement No. 1 and Trust Supplement No. 2 and each subsequent Trust Supplement entered into thereunder and any further supplement to the Trust Agreement. -18- 19 "Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA 1991 AWA-E3] No. 1 dated the Delivery Date between Lessor and Owner Participant for the purpose of bringing the Aircraft and the Original Head Lease into the Trust Estate. "Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA 1991 AWA-E3] No. 2 dated the Restatement Date between Lessor and Owner Participant conforming the references in the Trust Agreement to this Agreement. "United States Government" shall mean the federal government of the United States of America and any board, commission, department, division, organ, instrumentality, court or agency thereof. "Wet Lease" shall mean any arrangement whereby Lessee agrees to furnish the Engine to a third party pursuant to which such Engine (i) shall be operated solely by regular employees of Lessee possessing all current certificates and licenses required under the Federal Aviation Act (it is understood that cabin attendants need not be regular employees of Lessee) and Lessee otherwise maintains operational control and possession thereof, and (ii) shall be maintained by Lessee in accordance with its normal maintenance practices and this Lease to which the Engine is subject, and otherwise the insurance required hereunder shall be maintained and the Engine shall be used and operated in accordance with this Lease. Section 2. Agreement to Lease. Lessor hereby agrees to lease the Engine to Lessee, and Lessee hereby agrees to lease the Engine from Lessor, on the terms and subject to the conditions set forth in this Lease. Section 3. Delivery and Acceptance; Term. (a) Time of Delivery. The Engine was delivered to Lessee, and Lessee accepted delivery of the Engine, on March 27, 1991. (b) [Intentionally Left Blank.] (c) Acceptance of Engine. The Engine leased hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF. Lessee hereby agrees that it has accepted the Engine for all purposes of this Lease and Lessee's -19- 20 acceptance of the Engine was conclusive evidence that, as between Lessor and Lessee, the Engine was in all respects satisfactory to Lessee and was in compliance with this Lease. (d) Term of Lease. The Basic Term of this Lease shall commence on the Delivery Date and shall continue until the Expiration Date; provided, however, that the Term of this Lease may be earlier terminated pursuant to the provisions hereof. Section 4. Rent. (a) Rent. Lessee covenants and agrees to pay the following as Rent hereunder: (i) Basic Rent. The Basic Rent, as set forth in Exhibit C throughout the Basic Term hereof, in consecutive installments, in arrears as set forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent Payment Date to the Lessor; and (ii) Supplemental Rent. Any and all Supplemental Rent, which shall be due and payable ten (10) Business Days after demand unless otherwise specifically provided. In the event of any failure on the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic or Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to the terms hereof shall survive the expiration or termination of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder. (b) Minimum Payments. Notwithstanding any provision in this Lease or in any other Operative Document to the contrary, under all circumstances and in any event, (i) the Stipulated Loss Value, together with the payment of Supplemental Rent and all other Rent then due hereunder, as of any time and as of the date of any payment thereof shall (both before and after giving effect to any reductions therefrom) be in an amount at least sufficient to pay in full as of such time or date the aggregate unpaid principal amount of the Equipment Notes then outstanding and all accrued and unpaid interest (assuming interest has been timely paid) thereon and (ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the aggregate amount of principal and interest due and payable on the Equipment Notes on such Basic Rent Payment Date. It is agreed, however, that no installment of Basic Rent or Stipulated Loss Value shall be increased or adjusted by -20- 21 reason of (A) any attachment or diversion of Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes or the other Financing Documents made without the prior written consent of Lessee or (C) the acceleration of any Equipment Note due to the occurrence of any "Indenture Event of Default" (as defined in the Indenture) which does not constitute an Event of Default hereunder. It is further agreed that nothing in this Lease or any other Operative Document shall be deemed to constitute a guaranty of the value, utility or useful life of the Aircraft or a guaranty in respect of interest, principal or any other amounts payable in respect of or under the Equipment Notes. (c) Date, Place and Method of Payment. If any date on which a payment of Rent becomes due and payable is not a Business Day, the Rent otherwise due on such date shall be due and payable on the next succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall be paid by wire transfer in immediately available currency of the United States of America, no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so long as the Lien of the Indenture shall not have been discharged, to or as directed by Indenture Trustee in accordance with the payment instructions set forth in Exhibit C hereto or at such other address in the City of New York or Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior written notice to Lessee, except for all Excepted Payments. All Excepted Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be paid in such immediately available funds no later than 12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor or to Owner Participant, as appropriate, in accordance with the payment instructions set forth in Exhibit C or at such other address as Lessor may direct by thirty (30) days prior written notice to Lessee. (d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to perform all other obligations hereunder are absolute and unconditional and shall not be affected or reduced by any circumstances, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other right which Lessee may have against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Engine, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including, without -21- 22 limitation, any breach by Lessor of its representations, warranties or covenants contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility for registration under the Federal Aviation Act, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Engine (subject to the provisions of Section 11(a)(ii) hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person providing services with respect to the Engine or any other Person; (iii) any Liens with respect to the Engine; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any sublease or any absence of right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the expressed intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Agreement. Except as expressly set forth elsewhere in this Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the Engine or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including, without limitation, payment of Rent), except in accordance with the terms hereof. Each payment of Rent made by Lessee shall be final. Lessee will not seek to recover all or any part of any payment of Rent for any reason whatsoever except manifest error. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of Law, except as specifically provided herein, Lessee waives all rights (if any) to any diminution in its Rent obligations hereunder and nonetheless agrees to pay, to Indenture Trustee or -22- 23 Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the case may be, payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part, and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect. The foregoing shall not, however, be construed as a waiver of Lessee's other rights to seek damages, specific performance, other remedies at law or equity or any combination thereof, as against the Original Head Lessee, Lessor, Indenture Trustee or any other Person having an interest herein through the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be liable therefor, on account of any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other such Person to perform its express obligations under this Lease and the other Operative Documents, or to enforce any judgment obtained therefor. Section 5. Representations, Warranties and Covenants. (a) Warranties and Disclaimer of Warranties. THE ENGINE WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE ENGINE ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE ENGINE UNDER THIS LEASE OR BY HAVING ACQUIRED THE ENGINE OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE ENGINE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE ENGINE, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE ENGINE, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR -23- 24 DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE ENGINE) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE ENGINE OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE ENGINE OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE ENGINE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a)(i) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE ENGINE, EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that, (x) on the Delivery Date, Lessor had, and on the Restatement Date Lessor has, the right to lease the Engine hereunder and (y) on the Delivery Date the Engine was free of Head Lessor's Liens and on the Restatement Date the Engine is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume or suffer to exist any Lessor's Lien on the Engine. (b) Representations and Warranties of Lessor. Lessor hereby represents and warrants, as of the Restatement Date that its representations and warranties set forth in Section 9(b) of the Refunding Agreement were true when made and continue to be true and correct. (c) No Amendments to Financing Documents. Lessor covenants and agrees that Lessor will not, without the prior written consent of Lessee, amend, modify, supplement or waive any provision of any Financing Document in such a way as to materially increase Lessee's obligations hereunder or materially reduce Lessee's rights hereunder. -24- 25 The representations, warranties and covenants of Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of this Lease and the delivery of the Engine and the Restatement Date. (d) Suppliers' Warranties. So long as a Default or an Event of Default has not occurred and is continuing and provided that the Engine continues to be maintained, modified and repaired as required hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees otherwise to make available to Lessee the right to exercise in Lessee's name such rights as Lessor may have or may subsequently obtain (but without representation or warranty by or recourse to Lessor) with respect to any product warranty, service life policy, trademark, patent or copyright infringement indemnity, or propulsion system performance guaranty, of the Manufacturer or Manufacturer's subsidiary, if any, or any subcontractor or vendor with respect thereto under the Purchase Documents (except those which were given directly to Parent, the Original Head Lessee or any of their Affiliates and are not directly related to the operator's use of the Engine), to the extent that the same may be assigned or otherwise made available to Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense and upon its request, to enforce such rights as Lessor may have with respect thereto for the benefit of Lessee; provided, however, that upon and during the continuance of a Default or an Event of Default, such assignment or other rights which are otherwise made available to Lessee shall immediately and automatically without further action be deemed cancelled and, to the extent of any remaining interest held by Lessee, deemed reassigned to Lessor and all such rights shall revert to Lessor automatically including all claims thereunder whether or not perfected and all amounts payable shall be paid to and held by Lessor. In no event, however, shall Lessee have any right to amend, supplement or otherwise modify the Purchase Agreement (by change order or otherwise). In connection with the foregoing, Lessee agrees to be bound by and comply with all applicable terms, conditions and limitations of the provisions of the Purchase Agreement. Section 6. Possession and Use. (a) Possession. (i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF -25- 26 THE ENGINE; provided, that, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom and so long as the action to be taken shall not adversely affect Lessor's title to or other interest in, or the Lien of the Indenture on, the Engine or this Lease or the insurance required to be maintained hereunder and Lessee is otherwise in full compliance with Section 12, and so long as all necessary approvals of the FAA and any other Governmental Entity having jurisdiction have been obtained, then Lessee, without the prior written consent of Lessor, may, only to the extent provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below: (1) subject the Engine to a normal interchange, maintenance, servicing or pooling agreement or similar arrangement with a Permitted Sublessee, in each case customary in the airline industry of which Lessee is a part and entered into in the ordinary course of its business; provided that Lessor has been given an opportunity to review the interchange, maintenance, servicing, pooling or similar arrangement, including but not limited to all agreements and other documents relating thereto and has consented, which consent shall not be unreasonably withheld, to the placement of the Engine into such interchange, maintenance, servicing, pooling or similar arrangement and provided, further that (A) no transfer of the registration of the Engine shall be effected in connection therewith and (B) (i) no such agreement or arrangement contemplates, results in or requires the transfer of title to the Engine, and (ii) if Lessor's title to the Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to the Engine and not an Event of Default and Lessee shall comply with Section 11(a) hereof in respect thereof; (2) deliver possession of the Engine to the Manufacturer, or in accordance with the Maintenance Program to an FAA certified repair station, for testing, service, storage, repair, maintenance, inspection or overhaul work on the Engine or any part thereof or for alterations or modifications in or additions to the Engine to the extent required or permitted by the terms of Section 9 hereof; (3) transfer possession of the Engine to the United States of America or any instrumentality or agency thereof pursuant to a sublease; -26- 27 (4) (i) subject the Engine to the Civil Reserve Air Fleet Program and transfer possession of the Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program, so long as Lessee shall promptly notify Lessor upon transferring possession of the Engine to the United States Government pursuant to the Civil Reserve Air Fleet Program and provide Lessor with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notices must be given; (ii) subject the Engine to (a) a service contract with the United States Government, a copy of which shall be provided to Lessor, providing for possession to be held by the United States Government for a period not extending beyond the end of the Term, or (b) a requisition for use by the United States Government not constituting an Event of Loss; (5) install the Engine on an airframe owned by Lessee free and clear of all Liens except (A) Permitted Liens and Liens which apply only to engines (other than the Engine), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of participants under normal interchange agreements which are customary in the airline industry and do not contemplate, permit, result in or require the transfer of title to the airframe or the engine installed thereon; (6) install the Engine on an airframe leased to Lessee or owned by Lessee subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and except Liens of the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which provides that the Engine leased to Lessee hereby shall not become subject to the Lien thereof or to any rights of any party thereunder other than Lessee (with respect to Lessee's rights expressly granted hereunder), notwithstanding the installation of the Engine on any airframe subject to the Lien of such mortgage, unless and until Lessee shall become the owner of the Engine and Lessor shall have no further interest therein, all pursuant to the express terms of this Lease; and (B) there shall be in effect a written -27- 28 agreement of the lessor or secured party of such airframe (which may be contained in the lease or conditional sale or other security agreement covering such airframe) substantially similar in effect to the agreement of Lessor in Section 6(b) below whereby such lessor or secured party effectively and expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in the Engine by reason of the Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor, and a copy of such agreement shall be provided to Lessor upon written request; (7) install the Engine on an airframe owned by Lessee, leased to Lessee or purchased by Lessee subject to a conditional sale or other security agreement under circumstances where neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such installation shall be deemed an Event of Loss with respect to the Engine and Lessee shall comply with Section 11(a) hereof in respect thereof, Lessor not intending hereby to waive any right or interest it may have to or in the Engine under applicable Law until compliance by Lessee with such Section 11; (8) enter into a Wet Lease for the aircraft on which the Engine is installed in the ordinary course of Lessee's business for a period not extending beyond the Term; provided that if Lessee shall enter into any Wet Lease for a period of more than six months (including renewal options) Lessee shall provide to Lessor written notice of such Wet Lease (such notice to be given at least ten (10) Business Days prior to entering into such Wet Lease); or (9) sublease the Engine to any Permitted Sublessee on the terms and conditions set forth in Section 6(a)(iii) below. (ii) Certain Limitations on Transfers. With respect to any transfer pursuant to Section 6(a)(i): (1) the rights of any transferee that receives possession by reason of a transfer permitted by Section 6(a) hereof (other than the transfer of the Engine which is deemed to have been an Event of Loss) and any Wet Lease shall be expressly subject and -28- 29 subordinate to all the terms of this Lease and the Lien of the Indenture (if it has not been discharged); (2) Lessee's obligations hereunder and under the other Operative Documents shall continue in full force and effect and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such transfer had not occurred and no provision of this Lease shall be deemed a waiver of the Lessor's rights hereunder or under the other Operative Documents nor discharge or diminish any of Lessee's obligations hereunder or under the other Operative Documents; (3) During the Restricted Use Period, no Wet Lease, Permitted Sublease or other relinquishment of possession of the Engine pursuant to the terms of this Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease or other relinquishment of possession would cause the Engine to be "tax-exempt use property" within the meaning of Section 168(h) of the Code or cease to be "Section 38 property" within the meaning of Section 48(a) of the Code (as determined after the application of Section 47(a)(7) of the Code); (4) The term of any transfer, Wet Lease, Permitted Sublease or other relinquishment of possession shall not extend beyond the Basic Term or the Renewal Term (if Lessee shall have exercised its option to renew this Lease in accordance with the terms hereof); (5) No transfer, Wet Lease, Permitted Sublease or other relinquishment of possession of the Engine shall in any way discharge or diminish any of Lessee's obligations to Lessor or any other Person hereunder for which obligations Lessee shall remain primarily liable; (6) The sublessee under any Permitted Sublease, in its consent thereto, shall confirm that from and after the occurrence and continuance of an Event of Default and, unless an Event of Default specified in Section 17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease being deemed or declared in default, Lessor (and, so long as the Lien of the Indenture shall not have been discharged, Indenture Trustee) shall be entitled to enforce directly and in its own name all representations, -29- 30 warranties, indemnities, covenants and agreements under the applicable Permitted Sublease; and (7) Each Permitted Sublease shall (A) provide that (I) the Engine may not be operated or used other than as provided in this Lease and shall be maintained and operated as required hereunder, (II) Lessor may avoid or terminate such sublease following an Event of Default hereunder and (III) to the extent not accomplished by an assignment of the Permitted Sublease, upon the occurrence of an Event of Default hereunder, Lessee's rights under such Permitted Sublease shall automatically be deemed assigned to Lessor; and (B) be a "net lease" in accordance with industry practice and shall be comparable to, or more restrictive than, this Lease and under such Permitted Sublease (except a sublease to the United States Government or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor under such Permitted Sublease, must be entitled to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted Sublease shall contain provisions regarding such Section 1110 which are substantially the same as the related provisions of this Lease. In addition, from and after the occurrence and continuance of an Event of Default, all rent and other amounts payable by the Permitted Sublessee under such Permitted Sublease shall be paid directly to Indenture Trustee and, upon discharge of the Lien of the Indenture, to Lessor. (iii) Permitted Subleases. With respect to any sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or Section 6(a)(i)(9) above: (1) Lessee may sublease the Engine or the aircraft on which the Engine is installed to a Permitted Sublessee (each of which shall constitute a "Permitted Sublease") if (A) in any such case, the Permitted Sublessee under such sublease is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such sublease is entered into, (B) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier (other than a Foreign Air Carrier principally based in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Permitted Sublessee is principally based at the time such sublease is entered into (or, in the case of a sublease to a proposed Permitted Sublessee principally based in Taiwan, maintains -30- 31 diplomatic relations at least as good as those in effect on the Restatement Date) and (C) in the event that the Permitted Sublessee under such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee, in form and substance reasonably satisfactory to Owner Participant and the Indenture Trustee, to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions in foreign opinions generally) enforceable against the proposed Permitted Sublessee in the country in which the Permitted Sublessee is principally based, (II) there exist no possessory rights in favor of the Permitted Sublessee under such sublease under the laws of such Permitted Sublessee's country of domicile that would, upon bankruptcy or insolvency of or other default by Lessee, prevent the return or repossession of the Engine in accordance with the terms of this Lease, (III) (unless Lessee shall have agreed or is required to provide insurance covering the risk of requisition of use of the Engine by the government of the country of such Permitted Sublessee's country of domicile) the laws of such Permitted Sublessee's country of domicile require fair compensation by the government of such jurisdiction payable in currency freely convertible into dollars for the loss of use of the Engine in the event of the requisition by such government of such use, (IV) the Permitted Sublessee is either not entitled to sovereign immunity, or has effectively waived such sovereign immunity, with respect to its rights and obligations under the proposed sublease; (V) the laws of such Permitted Sublessee's country of domicile would give recognition to Lessor's title to the Engine, to the registry of the Engine in the name of the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee, as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it is not necessary under the laws of such Permitted Sublessee's country of domicile, solely as a consequence of such subleasing and without giving effect to any other activity of Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate thereof, as the case may be, for the Owner Trustee, the Owner Participant or the Indenture Trustee to qualify to do business in such jurisdiction and (VII) if the Owner Participant so requests, (x) under the laws of such Permitted Sublessee's country of domicile there is no tort liability of the owner of an aircraft not in possession thereof (it being agreed that in the event this opinion cannot be given in a form reasonably satisfactory to Owner Participant, such opinion shall -31- 32 be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk), and (y) such other matters as the Owner Participant reasonably requests, provided, however, that no sublease shall extend beyond the expiration of the Basic Term or any Renewal Term then in effect. Any Permitted Sublease shall expressly provide that the rights of any Permitted Sublessee shall be expressly subject and subordinate to all the terms of this Lease and to the Lien of the Indenture (if it has not been discharged), including, without limitation, the covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or terminate such Permitted Sublease upon such repossession, and Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease to the same extent as if such Permitted Sublease had not occurred. No Permitted Sublease shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under the other Operative Documents or constitute a waiver of Lessor's rights or remedies hereunder or under the other Operative Documents, and such rights shall continue as if such Permitted Sublease had not occurred. Any Permitted Sublease shall expressly prohibit any further sub-sublease or assignment or any other similar transfer of the Engine or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner Participant and the Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such notice to be given not later than ten Business Days prior to entering into any Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease together with an assignment, as security for Lessee's obligations hereunder, of such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days following the effective date of such Permitted Sublease. (b) [Intentionally Left Blank] (c) Lawful Insured Operations. Lessee will not permit the Engine to be serviced, repaired, maintained, used or operated in violation of any Law of any Governmental Entity having jurisdiction, or contrary to the Manufacturers' operating manuals or instructions, or in violation of any airworthiness certificate or limitation, license or registration issued by any such authority or any manufacturer's specifications, service bulletins or other requirements, including, without limitation, any -32- 33 manufacturer's requirements as may be applicable to keep in full force and effect each material warranty, product or performance guaranty, service life policy or the like, in each case, to the extent made mandatory for Part 121 operators similarly situated to Lessee or the Permitted Sublessee if the aircraft on which the Engine is installed is registered with the FAA, or the applicable laws of any other jurisdiction in which the aircraft on which the Engine is installed may then be registered in accordance with Section 11 of the Refunding Agreement, unless the validity thereof is being contested in good faith and by appropriate proceedings, but only so long as such proceedings do not involve any danger of sale, forfeiture or loss of the Engine or impair the interest of Lessor therein or impair the validity or priority of the Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with any insurance required to be maintained by Lessee hereunder. In the event that such Law or other requirement requires alteration of the Engine during the Basic Term or then-current Renewal Term, Lessee shall comply therewith at its sole expense and shall maintain the same in proper condition for operation under such Laws and other requirements. Lessee shall not operate in any manner or locate in any place the Engine, or suffer or permit the Engine to be operated by a Permitted Sublessee or otherwise in any manner or located by a Permitted Sublessee or otherwise in any place (i) unless the Engine is covered by insurance or United States Government indemnity as required by the provisions hereof or (ii) contrary to the terms of such insurance or United States Government indemnity. Lessee also agrees not to operate or locate the Engine or suffer or permit the Engine to be operated or located in any area excluded from coverage by any insurance policy issued pursuant to the requirements of this Lease or in any war zone unless insured or indemnified by the United States of America therefor, except in the case of operation pursuant to a sublease or contract with, or as a result of a requisition (not constituting an Event of Loss) by, the United States of America, and then only if Lessee has obtained insurance or an indemnity (in lieu of such insurance) from the United States of America covering such risks, in the amounts and otherwise as required by this Lease. (d) Maintenance. Lessee, at its own cost and expense, shall: (i) perform or cause to be performed all service, repair, maintenance, overhaul, inspections, alterations, modifications, and testing (A) in accordance with good airline industry practice and in such manner to provide complete data and documentation necessary to -33- 34 substantiate certification, (B) as may be necessary and required under, and in compliance with, applicable Law, including, without limitation, FAA rules, regulations and other requirements, any other applicable rules, regulations and requirements by any other applicable Governmental Entity, the Maintenance Program, airworthiness directives having a compliance date during the Term, and the service bulletins and other requirements of any manufacturer, including, without limitation, such requirements as may be applicable to keep in full force and effect any and all material warranties, product and performance guaranties, service life policies, indemnities or the like, (C) except during any period that a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Engine, as shall be the case with respect to similar engines owned by Lessee without discrimination and as if Lessee owned the Engine and was going to use the Engine in continued regular customer service after the expiration of the Term, and consistent with good industry practice, and during any period in which a Permitted Sublease is in effect, in the same manner and with the same care, including regard for the status and technical condition of the Engine, as shall be the case with respect to similar engines owned by such Permitted Sublessee without discrimination and as if the Permitted Sublessee owned the Engine and was going to use the Engine in continued regular customer service after the expiration of the Permitted Sublease, and consistent with good industry practice, provided, however, that in all circumstances the Engine shall be maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance standards required by, or substantially equivalent to those required by the central civil aviation authority of the country of registry, and, to the extent not inconsistent therewith, the FAA and (D) so as to keep the Engine in as good a condition as when delivered to Lessee, ordinary wear and tear excepted, and in good operating condition; (ii) keep the Engine or cause the Engine to be kept in such condition as is necessary to maintain in good standing the airworthiness of such Engine at all times under the Federal Aviation Act and any other applicable law or the applicable laws of any other jurisdiction in which the Engine may be registered in accordance with Section 11 of the Refunding Agreement (provided that if any grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee is contesting in good faith such grounding, Lessee shall not be deemed in violation of this maintenance covenant); and (iii) maintain in English all records, logs and other materials required by, and in a manner acceptable to, the FAA or any other Governmental Entity having jurisdiction and as provided -34- 35 under the Maintenance Program and Lessee's recordkeeping policies. (e) Registration and Insignia. Lessee shall cause the interests of Lessor and Indenture Trustee with respect to the Engine at all times, at its expense, to be duly recorded under the Federal Aviation Act in the name of Lessor or any successor or assignee, so long as the applicable parties to the Refunding Agreement cooperate with Lessee with respect thereto as reasonably requested by Lessee. Lessee shall cause the Indenture to be duly recorded and maintained of record as a duly perfected mortgage on the Engine and this Lease at all times. Lessee agrees at its expense to place such appropriate insignia, plates and other identification ("Lease Identification") on the Engine showing title thereto and the Lien of the Indenture as designated by Lessor and as Lessor may from time to time reasonably request. Unless otherwise requested, within five (5) Business Days of delivery of the Engine, Lessee shall fasten or cause to be fastened on each Engine (if not prohibited by applicable Law), a Lease Identification in the form set forth in Exhibit C hereto or with any other appropriate information in any other form subsequently designated by Lessor to Lessee. Except as provided herein, Lessee will not allow the name of any Person to be placed on the Engine as a designation that would be reasonably interpreted as a claim of ownership or Lien; provided, however, that Lessee may cause the Engine to have placed thereon the customary colors and insignia of Lessee or any Permitted Sublessee under a Permitted Sublease. Section 7. Inspection. During the Term of this Lease, Lessee shall furnish to Lessor, Owner Participant and Indenture Trustee such information concerning the location, condition, use and operation of the Engine as Lessor, Owner Participant or Indenture Trustee may reasonably request. Lessee shall permit, or cause any sublessee to permit, any person designated by Lessor, Owner Participant or Indenture Trustee -35- 36 on reasonable prior notice at reasonable times to visit, inspect and survey the Engine, its condition, use, and operation, and the records maintained in connection therewith, and to visit and inspect the properties and to discuss the affairs, finances and accounts of Lessee with the principal officers of Lessee, provided, that so long as no Default or Event of Default has occurred hereunder inspections shall be endeavored to be performed during regularly scheduled maintenance checks of the Engine. Each such inspection or survey shall be conducted so as to not unreasonably interfere with the business of Lessee or the maintenance or operation of the Engine. Upon Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify such Person of the next scheduled maintenance check for the Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to make any such inspection and shall not incur any liability or obligation by reason of not making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to object to any condition or procedure observed or observable in the course of an inspection hereunder shall not be deemed to waive or modify any of the terms of this Lease with respect to such condition or procedure. Section 8. Additional Covenants of Lessee. Lessee covenants and agrees that: (a) Financial Information. Lessee agrees to furnish Lessor, until the expiration or other termination of the Term of this Lease, the following: (i) within sixty (60) days following the end of each quarter of Lessee's fiscal year, except the last such quarter of such year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no longer files such report, an unaudited consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of the period ended, together with the related statements of income and cash flows for such period, and in each case certified by a Responsible Officer of Lessee as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices (subject to normal year-end audit adjustments); (ii) within one hundred five (105) days after the close of each fiscal year of Lessee, a copy of Lessee's -36- 37 Annual Report on Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no longer files such reports, an audited consolidated balance sheet, income statement, and cash flow statement of Lessee and its consolidated subsidiaries, as of the close of such fiscal year, and in each case as certified by independent public accountants, including their certificate and accompanying comments, as having been prepared in accordance with GAAP and as fairly presenting the financial condition and results of operations and changes in financial position for such period then ended in accordance with such principles and practices, without qualification as to the scope of the audit or non-conformity with GAAP; (iii) promptly upon their becoming available, copies of all reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934, as amended, and each other statement, report or circular (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) generally distributed to creditors or shareholders; (iv) prior to the expiration date of each policy of insurance required to be maintained hereunder, a certificate signed by the Approved Broker of Lessee as to the due compliance with the insurance provisions of Section 12 hereof with respect to the Engine, together with certificates of insurance evidencing such insurance and the opinion provided for in Section 12(f); (v) within fifteen (15) days following the end of each calendar month throughout the Term, an Engine status report, substantially in the form of Exhibit K hereto, including, without limitation, (A) a summation of hours and cycles accumulated on the Engine by individual serial number during such preceding calendar month and (B) the identity of the airframe (including the "N" number and, at Lessor's request, ownership and lien interests in respect thereof) on which the Engine was installed as of the end of each such calendar month, and, if Lessor so requests, the location of any such airframe. The foregoing shall not be deemed to require reports regarding hours or cycles on any Parts; (vi) together with each set of financial statements referred to in clauses (i) and (ii), a certificate signed by a Responsible Officer of Lessee, to the effect that such officer has reviewed the relevant terms of this Lease and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the accounting period covered by -37- 38 such financial statements, and that such review has not disclosed the existence during such accounting period, nor does such officer have any knowledge of the existence, as at the date of such certificate, of any condition or event which constitutes a Default or an Event of Default, or, if such condition or event which constitutes a Default or an Event of Default existed or exists, specifying the nature and period of existence thereof and what action Lessee has taken or is taking or proposes to take with respect thereto; (vii) as soon as practicable after becoming aware thereof, notice of damage or destruction to the Engine (or any Part) with a repair or replacement cost (including labor charges) in excess of $1,000,000; (viii) immediately after Lessee knows or should know of the occurrence thereof, notice of a Default; and (ix) from time to time such other information as Lessor may reasonably request. (b) Maintenance of Corporate Existence. Except as provided in Section 8(e) below, during the term of this Lease, Lessee will preserve and maintain its corporate existence and its rights, privileges, licenses and franchises material to Lessee's ability to perform its obligations hereunder in each applicable jurisdiction. (c) Maintenance of Status. Lessee is, and shall remain so long as it shall be the Lessee under this Lease, a "citizen of the United States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and shall maintain its status at all times as a Certificated Air Carrier, including, without limitation, its status so as to fall within the purview of 11 U.S.C. Section 1110 or any analogous statute. (d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes imposed upon it, or upon its income or profits, or upon any property belonging to it, on or prior to the due date thereof, including any extensions which have been duly obtained or granted; provided, however, that Lessee shall not be required to pay any such Taxes, the payment of which is being diligently contested in good faith and by appropriate proceedings with appropriate reserves so long as there is no material possibility that either failure to pay such Taxes or such contest may result in any loss, sale, confiscation, forfeiture or seizure of the Engine or any criminal liability on the part of Lessor, Indenture Trustee or any Note Holder. -38- 39 (e) Consolidation, Merger, Etc. Lessee shall not liquidate or dissolve; and Lessee shall not consolidate with or merge into or with any other corporation or other Person, and Lessee shall not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other assets (in one or a series of transactions) to any corporation or other Person, unless: (i) the Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a corporation organized and existing under the Laws of the United States of America or any State thereof or the District of Columbia; (B) immediately after giving effect to such transaction, shall be Lessee or shall have acquired or succeeded to all or substantially all of such property and other assets (including, without limitation, all or substantially all of Lessee's property and other assets) as an entirety and, unless the Owner Participant otherwise agrees, shall have a Net Worth of not less than Lessee's Net Worth immediately prior to such transaction; (C) shall be a "citizen of the United States" of America as defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee such recordations and filings with any Governmental Entity and such other documents as Lessor determines shall be reasonably necessary or advisable (including, without limitation, to preserve and protect the interests of the Lessor and the priority of the Lien of the Indenture (if it has not been discharged)) to evidence, or in connection with, such consolidation, merger, sale, lease, transfer or other disposition and an agreement, in form and substance reasonably satisfactory to Lessor, which is a legal, valid, binding and enforceable assumption by such Successor Entity of the due and punctual performance and observance of each covenant and condition of this Lease and the other Operative Documents to which Lessee is a party and agreement to be bound thereby, and an officer's certificate to such effect, and to the effect that the other requirements of this paragraph have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably satisfactory to Lessor; and (ii) prior to and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. -39- 40 No such permitted disposition to a Successor Entity shall relieve or release Lessee of or from any obligations hereunder or under the other Operative Documents. (f) Information. Within 60 days after the end of each calendar year and within 60 days of a request by Lessor or Owner Participant, or such shorter period as may be set forth in any written request by the Internal Revenue Service for information or documents, Lessee shall furnish in writing to Lessor or Owner Participant such information and documents (or copies thereof) regarding the Engine as may be reasonably requested by Lessor or Owner Participant or the Internal Revenue Service in order to permit Lessor to file its Federal and state income tax returns (or to permit the filing of the Federal and state income tax returns of any affiliated group of corporations filing a consolidated return of which Lessor is a member), or to maintain or defend any claims related thereto and promptly, after reasonable notice, furnish to Lessor or Owner Participant such information as may be reasonably requested by Lessor or Owner Participant or the applicable Governmental Entity as may be required to enable Lessor or Owner Participant to file any reports required to be filed by it with any Governmental Entity because of its ownership or other interest in the Engine. (g) Place of Business. At all times while this Lease is in effect, Lessee will not, without thirty (30) days prior written notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not have been discharged), change its chief executive office (as such term is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have so notified Lessor and, if applicable, Indenture Trustee. (h) Certain Limitations on Use. Lessee shall use the Engine only in commercial passenger operations and related cargo operations. Unless the Owner Participant otherwise agrees, during the Restricted Use Period, Lessee shall not use the Engine or permit the Engine to be used either "predominantly outside the United States" within the meaning of Section 48(a)(2) of the Code, or in such manner that the percentage of the income, deduction or credit attributable to the Engine for federal income tax purposes during any taxable year of the Lessor considered to be from foreign sources exceeds the Maximum Foreign Use Percentage. Unless Owner Participant otherwise agrees, prior to permitting the Engine to be operated in any member state of the European Union or other European country, Lessee shall -40- 41 deliver to Lessor (i) a representation and warranty to the effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant air traffic control authority over delinquent charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant air traffic control authority pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee (or such Permitted Sublessee) to the authority in respect of all engines (including, without limitation, the Engine) operated by Lessee (or such Permitted Sublessee). (i) Section 1110. Lessee acknowledges that Lessor would not have entered into this Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] unless it had available to it the benefits of a lessor under Section 1110 of Title 11 of the United States Code. Lessee covenants and agrees with Lessor that to better ensure the availability of such benefits, Lessee shall support any motion, petition or application filed by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the Engine under said Section 1110 and shall not in any way oppose such action by Lessor unless Lessee shall have complied with the requirements of said Section 1110 to be fulfilled in order to entitle Lessee to continued use and possession of the Engine hereunder. The acknowledgement, covenant and agreement contained in this Section 8(i) shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. (j) Permits and Licenses. Lessee shall make or obtain, and maintain in full force and effect, each and every consent, license, approval, notice, registration, filing or other action with any Governmental Entity necessary or advisable in connection with the operation or use of the Engine or any Part or the execution, delivery or performance of this Lease or the enforcement thereof against Lessee. (k) Security Opinion; Annual Certificate. (i) During such times that the Engine is recorded under the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee: (1) (X) prior to the expiration of the time period covered by the opinion of counsel -41- 42 rendered on the Restatement Date, any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any change in Law that would render the opinion of counsel rendered on the Restatement Date or such immediately preceding opinion of counsel inaccurate, an opinion of counsel with respect to Lessee and the FAA reasonably satisfactory to each addressee of such opinion (which counsel may be internal legal counsel of Lessee and FAA counsel) stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, rerecording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto, (ii) UCC financing statements and (iii) such other appropriate documents, as is necessary to maintain the perfection of Lessor's title to and/or interest in and Indenture Trustee's security interest in the Engine and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions or no action is necessary to maintain the perfection of such title and/or security interest; or (2) at any time that an opinion is not required pursuant to Section 8(k)(i)(1), annually, a certificate reasonably satisfactory to each recipient thereof signed by a Responsible Officer of Lessee certifying that no such action is necessary to maintain the perfection of such title and/or interest and security interest. (ii) During such times that the Engine is recorded under any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior to the expiration of the time period covered by any opinion of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such immediately preceding opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to each addressee of such opinion stating, in the opinion of such counsel, that such action has been taken with respect to the recording, filing, re-recording and refiling of (i) the appropriate Operative Documents and any supplements and amendments thereto and (ii) such other appropriate documents, as is necessary to maintain the perfection of -42- 43 Owner Trustee's title to and/or interest in and Indenture Trustee's security interest in the Engine and the Operative Documents for such period of time as reflects the then-current applicable Law, reciting the details of such actions. (l) Letter of Credit. As security for the obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or more irrevocable standby letters of credit, in form and substance acceptable to Lessor in its sole and absolute discretion (the "Letter of Credit"), including, without limitation, as to renewal provisions, with a face amount available for drawdown at all times equal to the amount set forth on Exhibit C (the "Face Amount"), which Letter of Credit shall: (i) provide that the full amount thereof shall be available for drawdown thereunder and payable in New York, New York, on demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default has occurred, which amount may be applied, retained or utilized as provided in the penultimate paragraph of this Section 8(l); (ii) be maintained in full force and effect at all times until ninety-one (91) days after the Expiration Date with a commercial bank acceptable to Lessor, in its sole and absolute discretion, having a long-term unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing bank's credit rating is lower than such rating, Lessee shall replace such Letter of Credit issuer within five Business Days of any such reduction in rating with a commercial bank meeting such rating requirement), provided, that the Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited will be acceptable to Lessor for so long as The Industrial Bank of Japan, Limited maintains a long term unsecured debt rating at least equal to its rating on the date hereof; (iii) be expressly designated as transferrable and assignable; and (iv) permit partial drawings. If the Letter of Credit is still in effect at the end of the Term or the Lessor is holding proceeds of the Letter of Credit that were retained and not applied as provided herein, then Lessor shall return the Letter of Credit to Lessee or terminate it, and/or return any retained or unapplied proceeds, ninety-one (91) days following the date of such expiration or other termination of this Lease so long as no Default or Event of -43- 44 Default has occurred or is continuing hereunder or under any Other Lease, upon payment in full of all amounts then due and owing to Owner Trustee and Owner Participant under the Operative Documents. If an Event of Default has occurred or is continuing under this Lease or an Event of Default has occurred or is continuing under any Other Lease (as therein defined), in addition to any other rights and remedies Lessor may have hereunder, under any Other Lease, any sublease and any and all other remedies available at Law (including, without limitation, the Uniform Commercial Code as adopted in New York) or equity and upon exercising its rights under the Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in each case as it may elect in its sole and absolute discretion, to (i) hold any amounts drawn under the Letter of Credit or Other Letters of Credit as security for Lessee's obligations under this Lease or, the Other Leases, (ii) retain any amounts drawn under the Letter of Credit or Other Letters of Credit for its own account and apply (including, without limitation, by way of set off against) such drawn amounts, as it may elect (it being understood that amounts not so applied will be held as security for Lessee's obligations under this Lease and the Other Leases) to remedy any breach by Lessee of this Lease or any other Operative Documents or Other Leases or (iii) recompense Lessor, Owner Participant or any of their respective Affiliates for any loss, damage, cost or expense or other Claim due or owing hereunder or under the Other Leases; provided, however, that in the case of any drawing in respect of any claim for payment of Rent, Lessee's right to apply the same to such claim shall be limited to amounts which would (absent such Event of Default) be distributable under the Indenture at the time such payment is made to Lessor, Owner Participant or any of their respective Affiliates (and shall not include any amounts distributable to Indenture Trustee in its individual capacity or to the Note Holders); provided further, however, that neither the amount so applied at any one time nor the aggregate amount so applied at different times shall reduce the amount of any installment or payment of Rent (whether upon the termination of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in full the amounts required to be paid on account of the principal of and any interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or credit with respect to any amounts so applied. Any amount retained shall be considered the property of Lessor and Lessor may commingle such amount with its general funds and Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum extent permitted by applicable Law, any interest therein. -44- 45 Lessee shall not be entitled to any interest or other earnings on such retained amount and such amount shall not be refundable. On application of all or any portion of the amounts drawn under the Letter of Credit or any Other Letters of Credit in accordance with this Section 8(l) or the Other Leases, Lessee shall on demand reinstate the amount of the Letter of Credit or Other Letters of Credit, as the case may be, to its or their full Face Amount or provide to Lessor one or more additional Letters of Credit meeting the requirements of this Section 8(l), so that the Letter of Credit and each of the Other Letters of Credit at all times equals the original Face Amount provided for herein. During such times as Lessor shall elect to hold all or part of the proceeds of the Letter of Credit or Other Letters of Credit as security for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee shall not be obligated to reinstate the amount of the Letter of Credit or Letters of Credit, as the case may be, in respect of the proceeds so held. Section 9. Replacement of Parts; Alterations, Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost and expense, will promptly replace, or cause to be replaced, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the ordinary course of maintenance, service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may at its own cost and expense remove any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and expense such Parts as promptly as possible. All replacement Parts shall be free and clear of all Liens (except for pooling arrangements to the extent permitted by paragraph (c) of this Section and Permitted Liens), be in at least the equivalent or better modification status and service bulletin accomplishment status, be fully interchangeable as to form, fit and function and shall be in as good operating condition as, and have a value, remaining useful life and utility at least equal to, the Parts replaced (assuming such replaced parts were in the condition and repair in which they were required to be maintained by the terms hereof). -45- 46 All Parts which are at any time removed from the Engine shall remain the property of Lessor, subject to the Lien of the Indenture if it has not been discharged, and subject to this Lease no matter where located until such time as such Parts shall be replaced by parts which have been incorporated or installed in or attached to the Engine and which meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Engine as above provided, or as provided in Section 9(c), without further act, (i) title to the removed Part shall thereupon vest in Lessee, free and clear of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no longer be deemed a Part hereunder, (ii) title to such replacement Part shall thereupon vest in Lessor and become subject to the Lien of the Indenture if it has not been discharged, and (iii) such replacement Part shall become subject to the Lien of the Indenture (if it has not been discharged) and this Lease and be deemed a Part for all purposes hereof to the same extent as the Part which it has replaced. (b) Alterations, Modifications and Additions. Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Engine to the extent made mandatory for Lessee (or a sublessee) in respect of the Engine or Parts from time to time to meet the applicable standards of the FAA or under any Law of any Governmental Entity having jurisdiction or issued by the manufacturer of the Engine or Parts. In addition, so long as no Default or Event of Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may from time to time make such alterations and modifications in and additions to the Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper conduct of its business, provided, no such alteration, modification or addition diminishes the value, remaining useful life or utility, or impairs the condition or airworthiness, of the Engine or any Part below that immediately prior to such alteration, modification or addition assuming that the Engine and Parts were then of the value, utility and remaining useful life and in the condition and airworthiness required by the terms of this Lease. Except as otherwise provided herein, title to all Parts incorporated or installed in or attached or added to the Engine as the result of such alteration, modification or addition, shall immediately vest in Lessor and become subject to the Lien of the Indenture (if it has not been discharged) and this Lease, without the necessity for any further act of transfer, document or notice. -46- 47 Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that so long as no Default or Event of Default shall have occurred and be continuing Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time during the Term for the Engine, remove any Part of such Engine, provided, that (i) such Part is in addition to, and not in replacement or substitution for, any Part originally incorporated or installed in or attached to, or delivered with, the Engine on the Delivery Date or any Part in replacement of, or substitution for, any such originally incorporated, installed, attached or delivered Part, (ii) such Part is not required to be incorporated or installed in or attached or added to the Engine pursuant to the terms of Section 6 or this Section 9 or to maintain the insurance required by Section 12 and (iii) such Part can be removed from the Engine without causing any material damage thereto and without diminishing or impairing the value, utility, remaining useful life, condition or airworthiness which the Engine would have had at such time had such alteration, modification or addition not occurred. Upon the removal by Lessee of any such Part as provided in the preceding sentence, title thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part shall no longer be deemed part of the Engine (such a part is herein called a "Removable Part"). Any Part not removed by Lessee as above provided prior to the return of the Engine to Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain the property of Lessor. If any Removable Part is (i) owned by any third party and leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a conditional sale contract or other security interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a lease which is subject to a security interest in favor of any third party, then Lessor will not acquire or claim, as against such lessor, conditional vendor or secured party, any right, title or interest in any such Removable Part as the result of such Removable Part being installed on the Engine; provided, however, that (A) Lessor's inability to so acquire or claim is subject to the express condition that such lessor, conditional vendor, or secured party shall have agreed in writing (which agreement may be contained in the lease, conditional sale agreement or security agreement) not to acquire or claim, as against Lessor, any right, title or interest in the Engine, or any Part other than its interest in such Removable Part by reason of such Removable Part being installed thereon, and (B) any Removable Part not -47- 48 removed by Lessee upon the termination or expiration of this Lease, at such time, shall become the property of Lessor and be subject to this Lease, and provided, further, that (1) if removal of any such Part shall affect the operation of the Engine in any way whatsoever, Lessee shall replace such Part with an owned Part of the same value, utility and remaining useful life and (2) Lessee shall repair any unsightly area of the Engine as a result of such removal and make all other repairs which are advisable and result from such removal. In the event Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) replaces a Part which is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may remove the replacement Part so long as it reinstalls the original Part and such original Part is free and clear of all Liens, other than Permitted Liens, is in at least the same modification status and service bulletin accomplishment status, is fully interchangeable as to form, fit and function, has been overhauled, repaired and inspected by an agency acceptable to the FAA or other Governmental Entity having jurisdiction, and is in as good operating condition as, and has a utility, remaining useful life and a value at least equal to that of such Part when it was removed from the Engine. In no event shall Lessor bear any liability or cost for any alteration, modification, or addition, or for any grounding or suspension of certification of the Engine, or for any loss of revenue arising therefrom. (c) Pooling. Any Part removed from the Engine as provided in Section 9(a) may so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom be subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement customary in the airline industry of which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into in the ordinary course of Lessee's or such Permitted Sublessee's business, provided that Lessor has been given an opportunity to review the pooling arrangement, including but not limited to all agreements and other documents relating thereto, and has consented, which consent shall not be unreasonably withheld, to the placement of Parts into such pooling arrangement and provided further that the Part replacing such removed Part shall be incorporated or installed in or attached to the Engine in accordance with Section 9(a) as promptly as possible, and in any event within sixty (60) days, after the removal of such removed Part. In addition, any Replacement Part when incorporated or installed in or attached to the -48- 49 Engine in accordance with Section 9(a) may be owned by another Person subject to such a normal pooling agreement; provided, however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly thereafter as possible, and in any event within sixty (60) days, either (i) causes title to such replacement Part to vest with Lessor in accordance with Section 9(a) (and to be subjected to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of and transferring title to Lessor free and clear of all Liens except Permitted Liens, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice, or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Engine a further replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all Liens other than Permitted Liens and by causing title to such further replacement Part to vest in Lessor as above provided and to be subjected to the Lien of the Indenture if it has not been discharged, whereupon such replacement Part shall become subject to this Lease and the Lien of the Indenture (if in effect) without the necessity for any further act, document or notice. Section 10. General Tax Indemnity. (a) Indemnity. Lessee agrees that each payment of Basic Rent hereunder shall be free and clear of, and without deduction for, any and all withholdings on account of Taxes of any nature whatsoever, whether or not an exclusion pursuant to Section 10(b) applies, except as required by law. If any such deduction or withholding of Taxes is required with respect to such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the net amount actually received by Lessor, after such deduction or withholding, will be equal to all such amounts that would be received by Lessor if no such deduction or withholding had been required, but only to the extent necessary to ensure that the holders of the outstanding Equipment Notes receive such amount as may be required by the Indenture. If Lessee pays any amount to Lessor (or to any taxing authority for the account of Lessor) as a result of the application of the preceding sentence with respect to any withholding Tax which is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to the extent such Tax would give rise to a Lessor's Lien for which the Owner Participant -49- 50 would be liable) shall reimburse Lessee for such withholding Tax within 30 days of written notice accompanied by evidence of payment for such withholding Taxes (exclusive of interest, penalties and additions to Tax) paid by Lessee provided that in any circumstance in which the Lessor is required to reimburse the Lessee for any such withholding Taxes and the Lessee has not received such reimbursement from Lessor or the Owner Participant, then to the extent of such shortfall and so long as no Lease Event of Default has occurred and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor by reducing the succeeding payments of Rent payable to Lessor (other than any portion of Rent that may be required by the Indenture to be paid to the holders of any outstanding Equipment Notes issued thereunder) until the aggregate amount of reduction is equal to the sum of the amount of such shortfall and interest on that amount at the Interest Rate from the date reimbursement is required to be made until the date of such reduction in Rent. Except as provided in Section 10(b), and taking into account any payments received by Lessor pursuant to the second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or imposed, whether levied or imposed upon or with respect to or asserted against any Indemnitee, Lessee, any Engine or any Part thereof or interest therein, or otherwise, with respect to any period beginning, or events or circumstances occurring, on or after the Restatement Date, by any federal, state or local government or taxing authority in the United States of America or by any foreign government or any taxing authority or governmental subdivision of a foreign country or of a territory or possession of the United States (each such governmental subdivision or taxing authority referred to as a Taxing Authority"): (i) upon or with respect to, based upon or measured by (A) any Engine or any Part thereof, or interest therein, (B) the manufacture, purchase, ownership, delivery, leasing, acceptance, rejection, assigning, possession, use, operation, location, settlement of any insurance claim, sale, mortgaging, pledging, financing, subleasing, rental, retirement, abandonment, registration, re-registration, deregistration, preparation, installation, modification, repair, maintenance, replacement, transportation, storage, transfer of title, return or other disposition of the Aircraft, the Airframe, any Engine or any Part thereof or interest therein; or (C) the rentals, receipts, income or earnings arising therefrom (including without limitation the Rent), or -50- 51 (ii) upon or with respect to the Operative Documents (including the Equipment Notes), any interest in any thereof, or any future amendment, supplement, waiver or consent thereto requested by Lessee with respect to any thereof, or the execution, delivery, or performance of any thereof, or the acquisition or subsequent transfer thereof or the issuance of the Equipment Notes or any other document executed and delivered in connection with the consummation or confirmation of the transactions contemplated by the Operative Documents or any Indemnitee's interest in any of the foregoing, or the execution, amendment, supplement, issuance, reissuance, refinancing or delivery of any of the foregoing, or (iii) the Trust Indenture Estate or the property, or the income or other proceeds received with respect to the property, held by the Indenture Trustee under the Indenture, or (iv) the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Equipment Notes, whether as originally issued or pursuant to any modification or reissuance, or (v) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions. The following Taxes shall not be subject to indemnification under subsection (a) of this Section 10: (i) In the case of any Indemnitee, Taxes imposed on, based on, or measured by, the gross or net income of such Indemnitee or Taxes in lieu thereof (including minimum taxes, withholding taxes and taxes on or measured by any item of tax preference) imposed by the federal government of the United States of America (other than taxes in the nature of sales or use taxes, license taxes, or property taxes), (ii) In the case of any Indemnitee, Taxes imposed on, based on, or measured by the gross or net income, receipts, capital, or net worth, franchises, excess profits or conduct of business of such Indemnitee (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference), imposed by any state, local or foreign government or taxing authority (other than Taxes in the -51- 52 nature of sales Taxes, use Taxes, license Taxes or property Taxes, and Covered Income Taxes described in subsection (c) of this Section 10), (iii) In the case of any Indemnitee, Taxes which arise out of or are caused by any gross negligence or willful misconduct of such Indemnitee, (iv) In the case of any Indemnitee, any Taxes imposed as a result of a voluntary or involuntary bankruptcy of such Indemnitee or any sale, transfer of title, transfer or other disposition by such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and Owner Participant are related Indemnitees with respect to each other) of any Engine or any Part thereof or interest therein, or any interest in the Rent or part thereof or any interest in the Operative Documents or part thereof, unless such sale, transfer or disposition occurs in connection with (A) an Event of Default and the exercise by any Indemnitee of its remedies under this Lease or the Indenture, as the case may be or (B) the substitution, pooling or interchange of the Aircraft, the Airframe, any Engine or any Part pursuant to the terms hereof; provided, however, that in all cases Owner Participant and Owner Trustee shall consider in good faith such request as Lessee shall make concerning the appropriate jurisdiction in which such sale, transfer or disposition shall be made, (v) In the case of any Indemnitee, Taxes imposed on a transferee of such Indemnitee of any interest in the Engine or any Part or any interest in the Operative Documents to the extent the amount of any such Taxes exceeds the amount of such Taxes that would have been imposed had there not been any such transfer, unless such transfer results from action by or on behalf of such Indemnitee taken in connection with any Event of Default that has occurred and is continuing or upon the request of the Lessee, (vi) Any interest, penalties, fines and additions to tax imposed on an Indemnitee (other than Taxes that are due and payable with a return when properly filed) resulting from such Indemnitee's failure to file returns that are timely and proper, provided such failure was not attributable to such Indemnitee contesting any claim in accordance with this Section 10(b) or to a failure by Lessee to satisfy its obligations related to such return, -52- 53 (vii) With respect to an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, Taxes which arise out of or are caused by (i) any act or omission or material misrepresentation of any Indemnitee where such act or omission is not permitted by the Financing Documents or the Operative Documents, or (ii) a failure by an Indemnitee to fulfill its contest obligations, and, in the case of the Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a result of a breach of such Indemnitee's representations, warranties, or covenants contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any material respect, or from a failure by such Indemnitee to fulfill its contest obligations, (viii) So long as no Event of Default shall have occurred and be continuing, Taxes attributable to the Aircraft related to acts or events occurring after the later of the termination of the Lease and the redelivery of the Engine, (ix) In the case of each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity and as trustee under the Pass-Through Trusts), the Subordination Agent and each Liquidity Provider, United States withholding taxes imposed as a result of the place of organization or other status of a holder of an interest in a Pass-Through Trust, or (x) In the case of the Indenture Trustee, each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the Subordination Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment Notes as a result of activities of such Indemnitee unrelated to the transactions contemplated by the Operative Documents. (c) Covered Income Tax. For purposes of clause (ii) of subsection (b) of this Section 10, a Covered Income Tax includes: (i) in the case of an Indemnitee other than the Indenture Trustee or the Trust Indenture Estate, any Tax imposed on, based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (other than taxes which are in the nature of sales or use taxes, license taxes or property taxes) imposed on an Indemnitee (A) by any state or local Taxing Authority other than Taxes imposed by any such state or local jurisdiction in which the Indemnitee has its principal place of -53- 54 business or is subject to such Tax as a result of business transactions or other presence unrelated to the transactions contemplated by the Financing Documents or the Operative Documents, unless such Taxes are imposed by such jurisdiction solely as a result of (x) the operation of the Engine in such jurisdiction or (y) the transactions contemplated by the Operative Documents, to the extent such taxes are directly attributable to such operation of the Engine or to such transactions, and (B) by any foreign jurisdiction which are imposed as a result of Lessee's or sublessee's activities in such foreign jurisdiction in connection with the transactions contemplated by the Financing Documents or the Operative Documents, provided, however, a Covered Income Tax also includes the incremental amount of franchise taxes, taxes on doing business, capital stock taxes or taxes on, based on or measured by gross or net income of the original Owner Participant attributable to the Lease (excluding, however, any taxes that would be excluded under any provision other than clauses (i) and (ii) of subsection (b) of this Section 10) which are imposed by the "Home State" of a sublessee (the Home State of a sublessee being the jurisdiction in which such sublessee maintains its principal operations and maintenance center), or in the absence of a Permitted Sublessee, the jurisdiction where the Engine is stored, but only to the extent such incremental taxes result from activities of Lessee or Permitted Sublessee under the Lease in or with respect to the Home State or the jurisdiction where the Engine is stored, and taking into account in calculating such incremental taxes all state tax benefits and savings in the Home State resulting from activities of Lessee or Permitted Sublessee under the Lease, disregarding for such purpose any actual or constructive changes in ownership of the original Owner Participant, provided, however, that Owner Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's liability for indemnity payments attributable to taxes incurred in sublessee's Home State with respect to each Permitted Sublessee; and (ii) in the case of the Indenture Trustee or the Trust Indenture Estate, any Tax based on or measured by gross or net income, receipts, capital or net worth, franchises, excess profits or conduct of business (including minimum taxes, withholding taxes, and taxes on or measured by any item of tax preference) imposed on such Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a territory or -54- 55 possession of the United States, other than any such Tax which would not have been imposed in the absence of such Indemnitee's (including for purposes of this definition, all entities with which such Indemnitee is combined, integrated, or consolidated in such Taxing Authority's jurisdiction) engaging in business, maintaining an office or other place of business or otherwise being located in such jurisdiction other than merely by reason of such Indemnitee's participation in the transactions contemplated by the Operative Documents. (d) Reports and Returns. In case any report or return is required to be made by Lessee with respect to any Taxes which are subject to indemnification by Lessee under this Section 10, Lessee will either make such report or return in such manner as will show the ownership of the Aircraft in Owner Trustee or the interest of Owner Participant or its permitted assigns and send a copy of such report or return to the Owner Participant or Owner Trustee or will notify the Owner Participant or Owner Trustee of such requirement and make such report or return in such manner as shall be reasonably satisfactory to the Owner Participant or Owner Trustee. If actual notice is given by any taxing authority to an Indemnitee that a report or return is required to be filed with respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such required report or return and Lessee shall either file such report or return in the manner prescribed in the preceding sentence, or shall use its best efforts to cause such report or return to be filed by the appropriate entity. Each Indemnitee agrees to respond to any reasonable request of Lessee for information not within Lessee's control and within the control of and reasonably available to such Indemnitee with respect to the filing of any such report or return, but Lessee agrees to pay any reasonable costs, fees, disbursements or other charges of independent counsel or independent accountants incurred in connection with such request. (e) After-Tax Basis. Lessee further agrees that, with respect to any payment or indemnity under this Section 10 and under Section 13 hereof, such payment or indemnity shall include the net amount necessary to hold the recipient of the payment or indemnity harmless on an after-tax basis from all Taxes required to be paid or credited by such recipient with respect to such payment or indemnity under the laws of any Taxing Authority; provided, however, that in the case of Taxes imposed on the Owner Participant, such Taxes shall be calculated on the basis of the assumption that Owner Participant shall be subject to the highest -55- 56 federal corporate income tax rate applicable to Owner Participant in the year of payment and the highest corporate income tax rate in the jurisdiction in which Owner Participant files a consolidated state income tax return (currently Virginia). (f) Tax Benefit. If, by reason of any payment made to or for the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax deduction or credit (including foreign tax credit and any reduction in Taxes) not previously taken into account in computing the amount of such payment, such Indemnitee shall promptly pay to Lessee, but only if there shall then be no Lease Event of Default and if Lessee shall have made all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee which is attributable to such deduction or credit and (ii) the reduction calculated on the same basis as the gross up in Section 10(e) hereof in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that such Indemnitee shall not be obligated to make any payment pursuant to this Section 10 or Section 13 hereof to the extent that the amount calculated pursuant to (i) above would exceed (A) the amount of all prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes required to be paid by such Indemnitee in respect of the receipt or accrual of such amounts received by such Indemnitee from Lessee, less (B) the portion of all prior payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder. (g) Payment. If a claim is made against any Indemnitee for any Taxes which may be subject to indemnification by Lessee hereunder and if such Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee; provided that the failure to provide such notice shall not release Lessee from any of its obligations hereunder except to the extent Lessee's right to contest such claim is precluded thereby. Any amount payable as an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be paid to such party directly, in immediately available funds, within thirty (30) days after receipt of a written demand therefor from such Indemnitee or Lessee, as the case may be, except in the case of a payment to an Indemnitee to the extent that such Taxes are being contested in good faith pursuant to this Section 10, in which event the payment of such indemnity shall be made by the due date for the payment of any Taxes that are -56- 57 the subject of such contest taking into account all extensions of the due date that are available as a result of the contest. In the event an Indemnitee makes a tax payment with respect to any such Taxes (other than with funds advanced to such Indemnitee on an interest-free basis by Lessee pursuant to this Section 10), Lessee shall reimburse the amount of such payment and also shall pay to the Indemnitee interest on the amount of such payment by such Indemnitee at the Interest Rate from the date of any such payment by such Indemnitee to the date of such reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is payable to Lessee under this Section 10, the Indemnitee owing such amount shall pay interest on such amount at the Interest Rate from the date of receipt by such Indemnitee of any amount giving rise to such obligation to pay Lessee until the date of payment to Lessee. (h) Contest. In the event that an Indemnitee receives a written notice of a claim which, if sustained, would require the payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's sole expense, in good faith contest or shall permit Lessee, if desired by Lessee and such contest may be conducted in whole or in part separately in the name of Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not paying the same except under protest, if protest is necessary and proper, and (z) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, the Lessee shall not be permitted to contest in the name of such Indemnitee if such contest involves Taxes imposed against such Indemnitee that are unrelated to the transactions contemplated by the Financing Documents or the Operative Documents or Taxes based on or measured by the gross or net income of the Indemnitee, and provided, that if the Indemnitee determines in good faith that there is a material possibility of a material adverse impact upon the Indemnitee with respect to such contest, such Indemnitee may retain or reassert control of any contest that Lessee would otherwise be permitted to contest; provided, further, that the Indemnitee shall not be required to undertake or allow in its name or on its behalf any contest unless the following conditions are satisfied: (i) Lessee shall have (a) furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to -57- 58 Lessee to the effect that a reasonable basis (as defined in ABA Opinion 85-352) exists to contest such claim (which opinion shall be obtained at Lessee's sole cost and expense), provided however, that in the event the subject matter of the contest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 10, there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have been so previously decided and such Indemnitee shall have received an opinion of tax counsel, to the effect that, as a result of such change other than a change in statutory law, it is more likely than not that the position which the Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail and, in the case of statutory changes-in-law, it is as likely as not that the position will prevail, and (b) agreed to pay Indemnitee for all reasonable costs and expenses which Indemnitee may incur in contesting such claim (including without limitation, payment on demand of all out-of-pocket costs, expenses, additions to tax because of underpayment of estimated taxes, losses, legal and accounting and investigatory fees and disbursements, penalties, and interests), (ii) a threshold amount of $50,000 for any individual claim is at issue, (iii) there is no substantial risk or danger of the sale, loss or forfeiture of the Engine, (iv) Lessee shall have admitted its liability to indemnify Owner Participant for such claim or set forth in writing why it is not so liable, (v) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Taxes, the Lessee shall have advanced to such Indemnitee sufficient funds (on an interest free basis) to make such payments, (vi) no claim shall be appealed to the U.S. Supreme Court, (vii) no appeal of a trial court decision shall be undertaken unless Lessee at its sole cost and expense shall have furnished Indemnitee with a written opinion of tax counsel selected by Indemnitee and reasonably acceptable to Lessee to the effect that -58- 59 Indemnitee is more likely than not to prevail in such appeal, and (viii) no Event of Default has occurred and is continuing. (i) Refund. If any Indemnitee shall obtain a refund of all or any part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee shall pay Lessee the amount of such refund together with any interest paid thereon attributable to the Taxes paid or advanced by Lessee less the amount of any Taxes payable by such Indemnitee in respect of the receipt of such refund and interest after giving credit to Lessee for any savings by such Indemnitee in respect to any such Taxes by reason of deductions, credits, allocations or allowances in respect of the payment of any such Taxes; provided that such amount shall not be payable before such time as Lessee shall have made all payments or indemnities then due to the Lessor and the Indemnitee under the Lease and all other Operative Documents, and provided further that no amount shall be payable during any period in which an Event of Default under the Lease has occurred and is continuing unremedied unless this Lease has terminated and Lessee has paid all amounts due the Lessor thereunder. (j) Diligence. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 10 so long as Lessee or the Indemnitee shall diligently prosecute such contest in accordance with the provisions of this Section 10. Notwithstanding the foregoing, if a claim is made against any Indemnitee for any Taxes which, if successful, would result in the imposition of Taxes under circumstances which would require Lessee to indemnify such Indemnitee, the Indemnitee shall be released from its responsibility to contest such claim or part thereof, if it agrees in writing not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event an Indemnitee fails to contest, or refuses to permit Lessee to contest, a claim or part thereof which the Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee for such claim or such part thereof. (k) Affiliated Group. In the event that the Indemnitee is a member of an affiliated group (within the meaning of Section 1504(a) of the Code) which files a consolidated Federal income tax return, the term "Indemnitee" shall mean and include any member of such affiliated group. -59- 60 (l) Verification. At Lessee's request, the amount of any indemnity payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified by an independent public accounting firm selected by such Indemnitee and reasonably satisfactory to Lessee. In order to enable such accountants to verify the indemnity amount, such Indemnitee shall provide to the accountants (for their own confidential use) information reasonably necessary for such verification to which Lessor has access; provided, however, such information shall not be disclosed to Lessee or any person other than such accountants. The fee of such firm shall be payable by Lessee unless such verification shall result in an adjustment in Lessee's favor exceeding 10% of the amount of the indemnity payment. (m) Survival. All of the obligations and rights of Lessee and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the Engines or any Part thereof shall survive the assignment, or expiration or other termination, of the Lease with respect to the Aircraft for a period of six (6) years from the occurrence of such assignment, or expiration or termination, except that such obligations shall survive the expiration of such six (6) year period with respect to any claim asserted prior to the expiration of such six (6) year period but in either case only to the extent such obligation or claim relates to events which occurred or conditions which existed during the Term. Such obligations are expressly undertaken by Lessee for the benefit of, and shall be enforceable by, Lessor. The provisions of this Section 10(m) are subject to the exclusions of Section 10(b)(viii). Section 11. Loss, Damage and Requisition. (a) Event of Loss with Respect to the Engine. Subject to the other provisions of this Section 11, upon an Event of Loss with respect to the Engine, Lessee shall forthwith (and, in any event, within five (5) Business Days after such occurrence) give Lessor written notice of such occurrence and within thirty (30) days after such occurrence give Lessor written notice of its election, subject to the terms hereof and of the Indenture, to perform one of the following two options (it being agreed that if Lessee shall not have given Lessor notice of such election within thirty (30) days after such occurrence, Lessee shall be deemed to have elected to perform the option set forth in the following clause (ii)), provided, that Lessee shall not have the right to select the option set forth in clause (i) if a Default or an Event of Default shall have occurred and be -60- 61 continuing at the time of such election or at the time of replacement: (i) within one hundred twenty (120) days (the "Replacement Period") after the date of the Event of Loss (but in no event later than the last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as provided in Section 11(b) hereof, to be subjected to the Lien of the Indenture if it has not been discharged, and to be leased by Lessee hereunder in replacement of the Engine, title to a replacement Engine, such replacement Engine (A) to be free and clear of all Liens (it being understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens), (B) to have a value, utility and remaining useful life, determined in accordance with the Appraisal Procedure as provided in Section 11(b) hereof, at least equal to, and to be in at least as good operating condition as, the Engine (assuming the Engine was maintained in accordance with the requirements of this Agreement, whether or not it is in fact so maintained), and (C) to be another IAE V2500 Engine of like model and equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988 or, at Lessee's option, an IAE engine of an improved model and in compliance with Section 11(b); provided that if Lessee shall not perform its obligation to effect such replacement under this clause by the end of the Replacement Period, Lessee shall then be deemed to have elected to comply, and shall comply, with the provisions of clause (ii) of this Section 11(a); provided, further, that the payment specified therein shall be deemed to have become due and payable on the Stipulated Loss Value Date occurring on or immediately preceding the last day of the Replacement Period. Upon compliance with the foregoing, Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that the Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Engine suffering the Event of Loss. For all purposes hereof, a replacement Engine shall be deemed part of the property leased hereunder and shall be deemed the "Engine" as defined herein. No Event of Loss resulting in replacement of the Engine under this Section 11(a)(i) shall result in any reduction of Rent. In addition to the foregoing, if Lessor so requests, as a condition to any substitution of the Engine under this Lease, Lessee shall use its best efforts to ensure that IAE acknowledges that such substitution shall not affect any product support or other agreements between or among IAE, Parent, Lessor or Lessee. -61- 62 (ii) On a Stipulated Loss Value Date on or before one hundred twenty (120) days after the date of the Event of Loss (or, if earlier, with respect to insurance proceeds, on the date on which insurance proceeds with respect to the Event of Loss are received by the loss payee) Lessee shall pay to Lessor in immediately available funds the sum of (A) the Stipulated Loss Value of the Engine as shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the date of payment of such Stipulated Loss Value which has not been paid when due, plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated Loss Value Date occurs after the last day of the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, in effect on the last day of the Term, for each day from and including the last day of the Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to the Engine for any period commencing after the date on which such Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain liable for, and shall pay on or before the date the Stipulated Loss Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the Engine due on or before the date of such payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with respect to such Engine, and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to the Engine suffering the Event of Loss. (b) Conveyance of Replacement Engine. Upon an Event of Loss with respect to the Engine, Lessee shall give Lessor prompt written notice thereof and shall, at its own cost and expense, within sixty (60) days after such occurrence convey or cause to be conveyed to Lessor as replacement for the Engine suffering an Event of Loss, title to another IAE Model V2500 engine of like model and equivalent or better modification status or, at Lessee's option, an IAE engine of an improved model, in each such case which has a value, remaining useful life and utility determined in accordance with the Appraisal Procedure at least equal to such Engine free of all Liens (it being -62- 63 understood that, upon such conveyance, such replacement Engine may be subject to Permitted Liens) and being in as good operating condition as (including no greater number of cycles or hours than) the Engine being replaced assuming the Engine being replaced was serviceable and otherwise in the condition and repair required by the terms hereof immediately prior to the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee, as applicable, with respect to such replacement Engine; (ii) cause supplements, in form and substance reasonably satisfactory to Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged), subjecting such replacement Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee (if the Lien of the Indenture has not been discharged) with such evidence of title to such Replacement Engine and of compliance with the insurance provisions of Section 12 hereof with respect to such Replacement Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged) may reasonably request; (iv) furnish Owner Participant and Indenture Trustee (if the Lien of the Indenture has not been discharged) with an opinion of Lessee's counsel addressed to such parties and to Lessor to the effect that title to such Replacement Engine has been duly conveyed to Lessor free and clear of all Liens (except Permitted Liens) and it is duly leased hereunder and subject to the Lien of the Indenture (if it has not been discharged), the instruments subjecting such Replacement Engine to the Lien of the Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Engine and the Lien of the Indenture on such Replacement Engine and that Lessor, and Indenture Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United States Code with respect to such replacement engine to the same extent as with respect to the Engine prior to such replacement; (v) furnish a certificate signed by a Responsible Officer of Lessee certifying that, upon -63- 64 consummation of such replacement, no Default or Event of Default will exist hereunder; (vi) furnish such documents and evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the Indenture has not been discharged), as such parties or their respective counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Section 11(b), the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth in this Section 11(b), in each case in form and substance satisfactory to such party; (vii) furnish such Uniform Commercial Code financing statements covering the Replacement Engine as may be requested by Lessor or Indenture Trustee (if the Lien of the Indenture has not been discharged); (viii) furnish Owner Participant with an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and which opinion is reasonably satisfactory to Owner Participant to the effect that such replacement will have no adverse tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of this Section 11(b), Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or warranty (except a warranty that such Engine is free and clear of Lessor's Liens), all of Lessor's right, title and interest, if any, in the Engine which suffered the Event of Loss. For all purposes hereof, each such Replacement Engine shall be deemed an "Engine" as defined herein. No Event of Loss covered by this Section 11(b) shall result in any reduction in Rent. (c) Application of Proceeds and Payments. Any payments received at any time by Lessor or by Lessee from any insurer (including a Governmental Entity providing an indemnity in lieu thereof) with respect to an Event of Loss shall be applied in the manner specified in Sections 12(c) and (e) hereof. Subject to Section 11(e) below, any payments (other than insurance or such indemnity proceeds) received at any time by Lessor or Lessee from any Governmental Entity or other Person with respect to an Event of Loss will be applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner Participant for their reasonable out-of-pocket costs and expenses): (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such -64- 65 Stipulated Loss Value and other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Engine which is being replaced pursuant to Section 11(a)(i) and (b) hereof, all such payments shall be paid over to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Sections 11(a)(i) and (b) hereof, and of Section 15 hereof with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Requisition for Use by Government with Respect to the Engine. Subject to Section 11(e) below, in the event of the requisition for use by a Governmental Entity of the Engine, Lessee will replace such Engine hereunder by complying with the terms of Section 11(a) to the same extent as if an Event of Loss had occurred with respect to such Engine, and thereafter any payments received by Lessor or Lessee from the Governmental Entity with respect to such requisition shall be paid over to, or retained by, Lessee. (e) Application in Default. Any amount referred to in clause (i) or (ii) of Section 11(c) or Section 11(d) which is otherwise payable to Lessee shall not be paid to Lessee, or, if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts shall be paid to and held by Indenture Trustee so long as the Lien of the Indenture shall not have been discharged and thereafter by Lessor as security for the obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as the case may be, applied by Lessor or the Indenture Trustee, as the case may be, toward payment of any of Lessee's obligations at the time due hereunder, as Lessor or the Indenture Trustee, as the case may be, may elect, including, without limitation, by reason of this Lease being declared or deemed in default. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Lessor or Indenture Trustee in excess of the amount, if any, which -65- 66 Lessor or Indenture Trustee has elected for application as provided above, shall be paid to Lessee. Section 12. Insurance. (a) Public Liability and Property Damage Insurance. Lessee will carry and maintain in effect, or cause to be carried and maintained in effect, at its own cost and expense, with Approved Insurers, comprehensive aircraft and general public liability insurance (including, without limitation, contractual liability, liability war risk and passenger legal liability products, completed operation liability covering maintenance of aircraft, but excluding manufacturer's product liability insurance), and property damage insurance with respect to the Engine and any airframe on which the Engine is installed (for purposes of this Section 12, any such airframe together with the Engine which is installed thereon shall be referred to as, the "Aircraft"), in an amount not less than three hundred fifty million dollars ($350,000,000), combined single limit, per occurrence or such higher amount, and of such type and terms, as are customarily carried by prudent Certificated Air Carriers, similarly situated to Lessee, operating aircraft of similar size and similar type engines and as hereinafter provided. Each and any policy of insurance carried in accordance with this Section 12(a), and each and any policy obtained in substitution or replacement for any of such policies, (i) shall designate Lessor (in both its individual and trustee capacity), Owner Participant, Indenture Trustee (in both its individual and trustee capacity) and the other Indemnitees and their respective permitted assigns, as additional insureds as their interests may appear (but without imposing upon any such Person any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, in such policies, the insurance shall not be invalidated as to an insured or additional insured by any act or omission of Lessee or any other insured or additional insured and shall insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, regardless as to any insured or additional insured of any breach or violation by Lessee or any other insured or additional insured of any warranty, declaration or condition contained in such policies, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if such -66- 67 insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, until thirty (30) days, in each instance (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage), after notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Engine is located or operated and (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees, and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, with respect to the Engine. Each liability policy shall be primary without right of contribution from any other insurance which may be carried by Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their respective permitted assigns, and shall expressly provide that all of the provisions thereof shall operate in the same manner as if there were a separate policy covering each insured, provided, that such policies shall not operate to increase the insurer's limit of liability. Lessee shall cause its insurers to agree that the indemnity and hold harmless provisions of Section 13 are insured as a contractual assumption of liability by Lessee's insurers, subject to the terms, coverage, conditions, limitations and exclusions of the policy of insurance. Without limiting the foregoing, the type and amount of the insurance carried by Lessee hereunder shall be no less in amount and no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees then that carried by Lessee with respect to other IAE V2500 engines or similar type engines or similar-type aircraft owned or leased by Lessee. (b) Insurance Against Loss or Damage. Lessee, at its own expense, will maintain in effect, or cause to be carried and maintained in effect, with Approved Insurers "all-risk" ground and flight aircraft and spares hull insurance (which shall include, but not be limited to, hijacking, a disappearance clause and coverage against strikes, riots, commotions or labor disturbances, air piracy, malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of control of the Aircraft in flight by a person on board such Aircraft acting without the -67- 68 consent of Lessee) covering the Engine and/or the Aircraft, as the case may be, and "all-risk" coverage including transit insurance with respect to the Engine and Parts while not installed on such Aircraft or an aircraft, which in each case considering all policy terms, limitations and exclusions is of the type, terms and amount customarily maintained by prudent Certificated Air Carriers similarly situated to Lessee and operating similar size aircraft and engines and as hereinafter provided. Lessee shall also maintain, or cause to be maintained, war risk and allied perils hull and spares insurance reasonably acceptable to Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or, in the case of an emergency, at least two (2) Business Days) prior to permitting the Engine or the Aircraft to be operated or located outside of the United States of America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or Indenture Trustee reasonably requests at any time and if such insurance is then customarily being obtained by or for Persons leasing or financing similarly sized aircraft operating on similar routes to operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for political risk, repossession, expropriation, confiscation and similar insurance as Lessor may arrange or cause to be arranged; provided that Indenture Trustee shall not be obligated to request such insurance and shall not be liable for any failure to request such insurance. Anything herein to the contrary notwithstanding, at all times while the Engine is subject to this Lease, the insurance required by this Section 12(b) shall be for an amount on an "agreed value" basis not less than the Stipulated Loss Value from time to time determined for the Engine. Without limiting the foregoing, the type and amount of insurance carried by Lessee hereunder shall be no less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than that carried by Lessee with respect to similar-size aircraft or similar engines owned or leased by Lessee. Each and any policy of insurance obtained and maintained pursuant to this Section 12(b), and each and any policy obtained in substitution or replacement for any such policies, (i) shall designate Lessor as owner of the Engine, shall designate, so long as the Lien of the Indenture has not been discharged, Indenture Trustee and thereafter, Lessor, as sole loss payee, as provided below and shall designate Lessor, Owner Participant, Indenture Trustee (in both its individual capacity and its trustee capacity) and the other Indemnitees and their respective permitted assigns -68- 69 as additional insureds, as their respective interests may appear (but without imposing upon Lessor, Owner Participant, Indenture Trustee and their respective permitted assigns, any obligation imposed upon the insured, including, without limitation, the liability to pay any premiums for any such policies), (ii) shall expressly provide that, in respect of the interests of such an additional insured and its permitted assigns, in such policies, the insurance shall not be invalidated as to an insured by any act or omission of Lessee or any other additional insured, and shall insure each such additional insured and its permitted assigns, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or another additional insured, (iii) shall provide that if such insurance is cancelled for any reason whatsoever, or is changed in any adverse way with respect to the interests of Lessor, Owner Participant, Indenture Trustee and to the other Indemnitees and their respective permitted assigns, or if such insurance is allowed to lapse, such cancellation, change or lapse shall not be effective as to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their respective permitted assigns, until thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) after written notice to Lessor, Owner Participant and Indenture Trustee from such insurer or insurers, as the case may be, of such prospective cancellation, change or lapse, (iv) shall include coverage for any country in or over which the Engine or the Aircraft may at any time be located or operated, (v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee, the other Indemnitees and their respective permitted assigns, each insurer shall waive any rights of set-off, counterclaim or any other deduction, whether by attachment or otherwise, and waives any rights it may have to be subrogated to any right of any insured against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and their respective permitted assigns, with respect to the Engine, (vi) shall provide that in the event of any damage or loss which is an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in the event of any damage or loss which is not an Event of Loss hereunder and which results in a payment, such payment shall be payable directly to Indenture Trustee as sole loss payee for the account of all interests, so long as the Lien of the Indenture shall not have been discharged and thereafter to Lessor, as sole loss payee for the account of all interests. The insurance required under this Section -69- 70 12(b) may incorporate deductible amounts which shall not exceed one million dollars ($1,000,000). Each of Lessor and Owner Participant shall have the right to carry additional and separate excess or contingent insurance for its own benefit at its own expense, without, however, thereby limiting Lessee's obligations under this Section 12, and Lessee shall not carry any such insurance if it would conflict with or adversely affect other insurance carried by Lessor or Owner Participant. Lessee shall have the right to carry insurance in excess of the amounts required hereunder and the proceeds of such excess insurance shall be payable to Lessee, provided, however, that such insurance does not conflict with or adversely affect the insurance required hereunder or any excess or contingent insurance carried by Lessor or Owner Participant. Lessee shall give Lessor reasonable prior written notice of any insurance to be carried by Lessee in addition to that required to be carried by Lessee as provided herein. In the event that separate policies are maintained to cover "all-risk" ground and flight aircraft, hull and war risks and allied perils insurance, Lessee shall include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by Lessee with respect to all other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Restatement Date shall be attached to the insurance certificate issued on the Restatement Date. (c) Application of Insurance Proceeds for an Event of Loss. It is agreed that insurance payments which arise from insurance required to be carried by Lessee pursuant to this Section 12 and received as the result of the occurrence of an Event of Loss shall be applied as follows (after reimbursement of Lessor, Owner Participant and Indenture Trustee for their reasonable out-of-pocket costs and expenses); (i) unless clause (ii) below is applicable, so much of such payments as shall not exceed the Stipulated Loss Value and other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture has not been discharged and thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated Loss Value and any other payments if not already paid by Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of Default shall have occurred and be continuing) be applied by Indenture Trustee or Lessor, as the case may be, to -70- 71 reimburse Lessee for its payment of such Stipulated Loss Value and other payments and the balance, if any, of such payment remaining thereafter shall be paid over to, or retained by, Lessor; or (ii) if such payments are received as a result of an Event of Loss with respect to the Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if Lessee shall have fully performed or, concurrently therewith fully performs, the terms of Section 11(a)(i) and (b) hereof and of Section 15 hereof, as the case may be, with respect to the Event of Loss for which such payments are made and if no Default or Event of Default shall have occurred and be continuing. (d) Application of Insurance Proceeds for Other than an Event of Loss. The insurance payments of any property damage loss to the Engine not constituting an Event of Loss with respect thereto will be applied in payment for the actual costs of repairs or for replacement property which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease against such documentation evidencing payment by Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or replacements already paid for by Lessee, and any balance remaining after compliance with such Sections with respect to such loss shall be paid to Lessor. Lessee shall be entitled to receive from the insurer any insurance proceeds not in excess of five hundred thousand dollars ($500,000) as soon as such funds are paid and shall promptly receive such additional insurance proceeds from the loss payee upon invoices for repair work in progress, replacement parts which are ordered or for work completed as provided above in this Section 12(d). Any amount referred to in this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at the time of such payment any Default or Event of Default shall have occurred and be continuing, but shall be held by Lessor as security for the obligations of Lessee under this Lease or applied as provided in Section 12(e). (e) Application in Default. Any amount referred to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be paid to Lessee, or if it has been previously paid to or retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter to Lessor, if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing. In such case, all such amounts -71- 72 shall be paid to and held by Indenture Trustee, so long as the Lien of the Indenture shall not have been discharged, and thereafter held by Lessor as security for the obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the time due hereunder, including, without limitation, by reason of this Lease being declared or deemed declared in default, as Indenture Trustee or Lessor may elect. At such time as there shall not be continuing any such Event of Default or Default, all such amounts at the time held by Indenture Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or Lessor has elected for application as provided above, shall be paid to Lessee. (f) Certificates. On or before the Delivery Date, and thereafter on any renewal by the Lessee of the insurance required hereby (but in no event less than once in every twelve (12) month period), Lessee will furnish to Lessor and Indenture Trustee a certificate executed and delivered by an Approved Insurer or the Approved Broker, describing in reasonable detail, and in accordance with customary practice, insurance carried on the Engine and Lessee shall also furnish an opinion or report by the Approved Insurer or the Approved Broker certifying that the insurance then maintained on the Engine complies with the terms of this Lease. Lessee will cause the Approved Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30) days (seven (7) days or such lesser period of time as is the insurance industry standard for war/allied perils coverage) prior to the expiration, non-renewal, termination or cancellation for any reason (including, without limitation, failure to pay premium therefor) or material modification of any such insurance. In the event Lessee shall fail to maintain insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at their respective options, may provide such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other such other Person who may have provided such insurance, for the cost thereof. (g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the Permitted Sublessee) may carry primary insurance outside of the aviation insurance markets in New York, London or Paris, if the relevant primary insurer shall have obtained reinsurance and such reinsurance (i) is on the same terms as the original insurance and includes the provisions required by this Agreement; (ii) -72- 73 provides in case of any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the original insurer that the reinsurers' liability will be to make such payment as would have fallen due under the relevant policy of reinsurance if the original insurer had (immediately before such bankruptcy, insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iii) contains a "cut-through" clause in the following form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby mutually agree that in the event of any claim arising under the reinsurances in respect of a total loss or other claim where as provided by the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] dated as of November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such claim is to be paid to the person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the original insured, its successors in interest and assigns pay to the person named as sole loss payee under the primary insurances effected by the original insured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the original insurer (subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith." (h) Storage. During any period that the Engine or the Aircraft is in storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the insurance required by Sections 12(a) and (b) above, insurance otherwise conforming with the provisions of said Sections 12(a) and (b) except that the scope of the risk and the type of insurance, and the amount of the insurance in the case of the insurance described in Section 12(a) above (but not the amount of insurance to be carried under Section 12(b) above), shall be the same as from time to time applicable to similar engines or similar size passenger aircraft that comprise Lessee's fleet in similar storage or grounding, and in any event (including, without limitation, at any time when there shall be in existence a Permitted Sublease), the same as from time to time customarily carried by similarly-situated, prudent Certificated Air Carriers for similar engines as the engines in similar storage or grounding. (i) Amounts Held. So long as no Default or Event of Default has occurred and is continuing, any amount held by Lessor or Indenture Trustee, as the case may be, until -73- 74 application by Lessor or Indenture Trustee, as the case may be, pursuant to this Section 12 shall be invested as provided in Section 21(h) hereof. (j) After the Term. Lessee shall continue to maintain at its expense the insurance described in Section 12(a) for three years after the expiration or termination of the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in accordance with Section 20, covering each Indemnitee as its interest may appear and specifically insuring the indemnity contained in Section 13 to the extent of the coverage of such policy. (k) Governmental Indemnity. In lieu of certain of the insurance described in Section 12 above, Lessee may provide a United States governmental indemnity, to the extent and subject to the terms and conditions specified in Section 6(c). Section 13. General Indemnity. Lessee hereby agrees to indemnify, reimburse, defend and hold harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e), within fifteen (15) days after demand from and against any and all claims (whether or not based on strict liability), damages (whether direct, indirect, incidental, special or consequential), losses, charges, fees, liabilities, obligations, demands, suits, judgments, actions and other legal proceedings (whether civil or criminal), penalties, fines, other sanctions, and any reasonable costs and expenses, in connection herewith, including, without limitation, costs and expenses set forth in Section 21(j) hereof and reasonable attorney's fees and expenses of whatever kind or nature (any and all of which are hereafter referred to as "Claims") imposed on, or asserted by or against, or suffered or incurred by, any Indemnitee, from (and including) the Restatement Date, including, without limitation, injury, death or property damage of passengers, shippers and others, environmental control, noise and pollution regulations, which in any way may result from, pertain to, or arise in any manner out of, or are in any manner related to (1) the Operative Documents, the Purchase Documents or the Financing Documents, or any of the transactions contemplated thereby; (2) the Engine or any Part thereof, including, but not limited to, (A) the importation, exportation, condition, manufacture, design, purchase, ownership, registration, reregistration, deregistration (other than any deregistration caused by the failure of the registered owner of the Engine to be a "citizen of the United States" as defined under the Federal Aviation Act and the regulations -74- 75 thereunder or to file the documentation necessary to continue FAA registration of the Engine), delivery, non-delivery, assignment, leasing, subleasing, sub-subleasing, acceptance, rejection, possession, repossession, control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture), use, performance, modification, maintenance, overhaul, operation, pooling, interchange, repair, testing, sale, return or other disposition or application of the Engine or any Part (including, but not limited to, latent and other defects whether or not discoverable by Lessee or Lessor, Claims related to any actual or alleged violation of Law, loss or damage to any property of passengers, shippers or otherwise or any Claim related to patent, copyright, trademark or other infringement) either in the air or on the ground, and, including, without limitation, any interest therein or in the Operative Documents of an Indemnitee or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the Indenture), or the rentals, receipts or earnings therefrom (including, without limitation, the Rent and any other amounts paid or payable with respect thereto); or (B) any defect in the Engine or any Part thereof arising from the material or any article used therein, whether from the design, testing or use thereof from any maintenance, service, repair, overhaul or testing of the Engine or such Part, or otherwise regardless of when such defect shall be discovered, whether or not the Engine or such Part is at the time in the possession of Lessee, and regardless of where the Engine or such Part may then be located; or (3) the breach of any representation, warranty or covenant made by Lessee hereunder or under any of the other Operative Documents or any Default or Event of Default; provided, however, that the indemnity provided for in this Section 13 shall not apply to any portion of a Claim of an Indemnitee to the extent it results from: (i) the gross negligence or willful misconduct of such Indemnitee or any of its directors, officers, employees, servants or agents (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any express representation, warranty or covenant made by such Indemnitee herein or in any other Operative Document, or the Financing Documents (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide -75- 76 for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to (but excluding) the Restatement Date (other than Claims related to the condition, manufacture or design of the Engine), (v) an underlying act which occurs after the Engine has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents, except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition or (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents (provided, however, in no event will Lessee be liable for any Claims resulting from, pertaining to or arising from or related to Lessor's granting or creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien). Upon full payment of the indemnities herein, Lessee shall be subrogated to all rights and remedies which such Indemnitee may have against any third party against whom such Indemnitee has the right to assert a Claim which arises under any action described in this Section 13 (except Claims under such Indemnitee's own insurance policies or under the indemnification provisions of any of the Financing Documents). Without limiting Lessee's liability under this Section 13, Lessee hereby waives and releases any Claim now or hereafter existing against any Indemnitee, on account of any Claims for or on account of or arising or in any way connected with injury to or death of personnel of Lessee or loss or damage to property of Lessee or the loss of use of any property which may result from or arise in any manner out of or in relation to the importation, exportation, ownership, purchase, registration, reregistration, deregistration (except as to Owner Participant or Lessor as -76- 77 and to the extent such Indemnitee is responsible under the Refunding Agreement for Claims related to such deregistration), delivery, non-delivery, assignment, leasing, subleasing, manufacture, acceptance, rejection, possession, return, financing, performance, modification, maintenance, condition, use, operation, pooling, interchange, repair, testing, sale, return or other disposition of the Engine or any Part thereof, either in the air or on the ground, or which may be caused by any defect in the Engine or such Part from the material or any article used therein or from the design or testing thereof, or use thereof or from any maintenance, service, repair, overhaul, or testing of the Engine or such Part, claims for infringement, loss of or injury to any person, loss of or damage to any property or environmental damage, regardless of when such defect may be discovered, whether or not the Engine or such Part is at the time in the possession of Lessee, and regardless of the location of the Engine at any such time except to the extent that such Claim results from (i) the gross negligence or willful misconduct of such Indemnitee (except any such gross negligence or willful misconduct as may be attributed to an Indemnitee due to its interest in the Engine, any Operative Document, any Purchase Document or any Financing Document), (ii) the material breach of any of its express representations, warranties or covenants hereunder, under any other Operative Document or Financing Document (not resulting from a breach by Lessee of any of its representations, warranties or covenants in the Operative Documents or in the Financing Documents), (iii) any Taxes, whether or not Lessee is required to indemnify such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it being understood that Section 10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's liability with respect to Taxes), (iv) any Claim which relates solely to events which occurred prior to but excluding the Restatement Date (other than Claims related to the condition, manufacture or design of the Aircraft) and any Claim concerning payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs after the Aircraft has been returned to Lessor in accordance with the terms hereof and the Term of this Lease has been terminated or has expired and the return is not related to an Event of Default, (vi) an underlying act which occurs after a disposition or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase Documents or the Operative Documents (except as contemplated under or pursuant to the Operative Documents, the Financing Documents or the Purchase Documents and except as resulting from the exercise of its remedies during the -77- 78 period while an Event of Default has occurred and is continuing and prior to the time such Indemnitee has received payment of all amounts owing to it hereunder and except any Claim which is alleged or does relate to the period prior to such disposition), (vii) the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any of the Financing Documents, the Purchase Documents or the Operative Documents, which amendments, supplements, waivers or consents were not requested by Lessee or are not required to give effect to the provisions of the Operative Documents, the Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such Indemnitee. Each Indemnitee shall, at Lessee's sole cost and expense and with Lessee's cooperation, be entitled to conduct the defense of any Claim against it; provided, however, that Lessee shall, at the request of any Indemnitee and, so long as no Event of Default has occurred and is continuing, assume and conduct promptly and diligently, at its sole cost and expense, the defense of such Indemnitee against any Claim of a third party with counsel reasonably acceptable to such Indemnitee; and provided, further, however, that Lessee shall have the right as well as the obligation to assume such defense to the extent required under the terms of the applicable insurance policies so long as no Default or Event of Default has occurred and is continuing. In the event Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate with Lessee in defending such Claim, but any expenses incurred by such Indemnitee in connection therewith shall either be paid by Lessee to such Indemnitee in advance, or reasonable security shall be provided by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter into a settlement or other compromise with respect to any Claim which Lessee or such Indemnitee is defending hereunder in excess of $100,000 without the prior written consent of the other, which consent shall not be unreasonably withheld. Each Indemnitee agrees to give Lessee prompt notice of any Claims by a third party hereunder following such Indemnitee's actual knowledge of such Claims by third parties, but the failure of such Indemnitee to give the notice required by this Section 13 shall not constitute a release by Lessor or such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to such Indemnitee in respect of any such Claim or otherwise affect the obligations or liabilities of Lessee to any Indemnitee in respect of any such Claim, except to the extent that Lessee's ability to control the defense thereof where Lessee -78- 79 has the right to control the defense thereof is materially prejudiced as a result solely of such failure of such Indemnitee to give such notice. An Indemnitee or Lessee shall supply the other with such information requested by the other as is reasonably necessary or advisable for the other to control the defense of a Claim to the extent permitted by this Section . Nothing in this Section shall be construed as a guaranty by Lessee of payments due pursuant to any indebtedness incurred with respect to the purchase of the Engine or of the residual value of the Engine. Notwithstanding anything herein or in any other Operative Document to the contrary, with respect to any Claim for which any Indemnitee is entitled to indemnification under more than one provision of this Lease or any other Operative Document, such Indemnitee shall be entitled to recovery for such Claim only pursuant to one such provision as it may select in its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not be entitled to any double recovery for the same Claim). The indemnities contained in this Section 13 shall continue in full force and effect notwithstanding the expiration or other termination of this Lease or any of the other Operative Documents and are expressly made for the benefit of and shall be enforceable by each Indemnitee. Section 14. Liens. Lessee shall not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Engine or any Part thereof, title thereto, or any interest of Lessor therein or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein provided or provided under the other Operative Documents or the Financing Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or being diligently contested in good faith by appropriate proceedings in accordance with Section 10 and so long as adequate reserves are maintained with respect to such Liens and only so long as neither such proceedings nor such Liens involve any material danger of the sale, forfeiture or loss of any of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein or any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other like inchoate Liens arising -79- 80 in the ordinary course of business for sums not overdue by more than 45 days or being diligently contested in good faith and only so long as neither such proceedings nor any such Liens involve any material danger of the sale, forfeiture or loss of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of other Persons to the extent expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee) unless the judgment or award shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay and only so long as such Liens shall not involve any material danger of the sale, forfeiture or loss of the Engine or any Part, or any interest of Lessor or Indenture Trustee therein and provided that the execution of such judgment or award or an attachment relating thereto shall not have occurred within such thirty (30) day period; and, (vii) any other Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not been discharged) and Owner Participant. Lessee shall promptly, at its own expense, take or cause to be taken such action as may be necessary to duly discharge any Lien (except for the Liens referred to in clauses (i) through (vii) of this Section 14) directly or indirectly created, incurred, assumed, or suffered to exist by Lessee if the same shall arise at any time. Section 15. Protection of Title and Further Assurances. Forthwith upon the execution and delivery of this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust Supplement, and any other supplement from time to time required by the terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and such other supplements to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft and the Engine. If any filing or recording is reasonably necessary to protect the interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default) and upon request by Lessor cause -80- 81 any financing statements and any and all additional instruments and other documents, so far as permitted by applicable Law, to be kept, filed, and recorded and to be re-executed, refiled and re-recorded at all times in the appropriate office pursuant or in relation to any applicable Laws of any Governmental Entity, to protect and preserve the rights and interests of Lessor or Indenture Trustee hereunder, under the Indenture and in the Engine, and Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or refiling and recordation and rerecordation. Without limiting the foregoing, Lessee shall do or cause to be done, at Lessee's cost and expense (except it shall be at Lessor's expense if in connection with a change in ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things within its control which may be required under the terms of the Mortgage Convention to protect and preserve the title of Lessor, the Lien of the Indenture, this Lease and the interests of Lessor and Indenture Trustee within the jurisdiction of any signatory which has ratified the Mortgage Convention in such jurisdiction and in the territories thereof in which Lessee, any Permitted Sublessee or any wet sublessee may operate the Engine, as Lessor may reasonably request. Lessee shall also do or cause to be done, at its own expense (except it shall be at Lessor's expense if in connection with a change in the ownership of the Engine or any other transfer or assignment by Lessor other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), any and all acts and things which may be required under the terms of any other Law involving any jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may operate the Engine, which Lessor may reasonably request, to protect and preserve the title of the Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest in the Engine and under any of the Operative Documents or Financing Documents within any such jurisdiction. In addition, at Lessee's expense, Lessee will promptly and duly execute and deliver to Lessor or Indenture Trustee, as applicable, such further documents and assurances and take such further actions as Owner Participant or Indenture Trustee may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Lease and the other Operative Documents and the Financing Documents and to protect the rights and remedies created or intended to be created in -81- 82 favor of Lessor or Indenture Trustee hereunder and the other Operative Documents and the Financing Documents including, without limitation, if reasonably requested by Owner Participant or Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's expense if in connection with a change in the ownership of the Engine or any other transfer or assignment by Lessor or Indenture Trustee other than as contemplated hereunder or under the Financing Documents or in connection with an Event of Default), the execution and delivery of supplements or amendments hereto in recordable form, subjecting to this Lease, the Indenture and the other Financing Documents, any replacement Engine and the recording or filing of counterparts thereof in accordance with the laws of any appropriate jurisdiction. Section 16. Return of Engine and Records. (a) Return. On any Return Occasion, Lessee, at its own expense and risk, shall return the Engine to Lessor (or any Person designated by Lessor) in at least the condition specified in this Section and Exhibit E hereto at any Lessee system location in the continental United States selected by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may agree. (b) Status Upon Return. Upon any Return Occasion hereunder, the Engine shall be: (i) free and clear of all Liens, except for the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy engine by the FAA under Part 121 of the regulations promulgated under the Federal Aviation Act which are in effect on the date of such Return Occasion; (iii) in full airworthy condition for over water and EROPS operation according to the FAA standards required to allow the Engine to be operated under, and in full compliance with, an applicable standard certificate of airworthiness and Part 121 of the regulations promulgated under the Federal Aviation Act for such operation, such compliance to be by means of such mechanical repairs or modifications or such inspections as may be required thereby, but not by operational restrictions, by logbook entries or other method of acceptance of such restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) in full compliance with the maintenance and operation provisions of this Lease and all FAA airworthiness directives, mandatory service bulletins and equivalent requirements which by their terms require compliance on or before the last day of the Term (without regard to any deferral, waiver, deviation or exemption granted by the FAA specifically to Lessee delaying such compliance); (vi) in good and airworthy operating condition, and in the same condition as when delivered to -82- 83 Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding deferred maintenance items, scheduled or unscheduled, with all systems and components fully serviceable and operational and with no placards restricting operation or use, and (vii) with all remaining warranties, indemnities, policies and guarantees referred to in Section 5(d) made available to Lessor in a manner and by documents in form and substance reasonably satisfactory to Lessor. (c) Substitute Engine. In the event any engine not owned by Lessor shall be redelivered on any Return Occasion, without limiting Lessee's obligations under the Tax Indemnification Agreement, such engine shall be of the same model and equivalent modification status as the Engine or, at Lessee's option, an IAE engine of an improved model suitable for installation and use on an Airframe without diminishing the value, remaining useful life or utility of such Airframe, in each such case having a value, remaining useful life and utility at least equal to (as determined in accordance with the Appraisal Procedure), and be in an operating condition as good as the Engine, assuming the Engine was in the condition and repair as required by the terms hereof immediately prior to such termination and shall conform to the return condition requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own expense and concurrently with such delivery, shall cause such engine to become an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply with the terms of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee all of Lessor's right, title and interest in and to any such Engine at the Return Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of any kind whatsoever, express or implied, except a warranty that such Engine is free and clear of Lessor's Liens. (d) Records and Documents. Upon the return of the Engine, Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection, modification, overhaul and other records, related to the Engine, including, without limitation, those required to be maintained with respect thereto under applicable rules and regulations of the FAA, together with a detailed description of the Maintenance Program then applied to the Engine and shall provide Lessor and its designees access to the Maintenance Program which is sufficient for a Person to maintain the Engine under an FAA approved maintenance program after the Term or to transition maintenance to another program, including, without limitation, another registry, or, in the event an Event of Default shall have occurred, to continue to maintain the Engine under the Maintenance Program, in each case as Lessor -83- 84 may reasonably request, and all documentation with respect to the Engine set forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all records necessary or required by the FAA to certify and place the Engine on an FAA or other country's, as the case may be, approved maintenance program. All of the foregoing shall, at Lessee's expense, be up-to-date and in the latest revision status as of the last day of the Term, including, without limitation, all software and other electronically-held materials which have been supplied by or on behalf of Manufacturer or Original Head Lessee, which must be updated to the latest revision status as of the last day of the Term within such software base and all data therein or pertaining thereto shall be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e., non-computerized, copies of English language maintenance records are not available, then Lessee shall cause the appropriate action to be taken with the pertinent regulatory agencies to ensure that Lessor and the FAA are provided with all requested necessary and proper guarantees of methods of compliance, component overhaul and management, scheduling, quality control, serial number verification, etc. These records shall be all inclusive to the Engine, components, rotables, and assemblies and, as a minimum, extend to include all activities associated with each of the last completed maintenance checks, repairs, scheduled inspections and functional tests, and overhauls performed under Lessee's Maintenance Program. All components and assemblies identified with safe life limits shall be identified with their service histories, accumulated cycles or flight hours as applicable and remaining service lives on a separate listing; such identification shall be sufficient to allow traceability of such components and assemblies from the date on which such components and assemblies were manufactured to the date on which such identification is made, and to measure the service histories, accumulated cycles or flight hours as applicable and remaining service lives in each engine, including but not limited to the Engine, in which such components and assemblies have been used. All components and assemblies which are identified on the maintenance records by part numbers and serial numbers other than the manufacturer's shall be provided with interchange or cross reference listing necessary to establish complete traceability. All documentation, flight, and maintenance records as specified by United States Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation 121.380 which normally accompany the transfer of an engine which has been operating in regulated commercial air service, shall be delivered to Lessor with the Engine. Any documents or records required to be delivered hereunder shall be in English. -84- 85 (e) Condition of Engine. Upon any Return Occasion, Lessee shall return such Engine to Lessor in such condition that the Engine shall also comply with each and every condition and requirement set forth elsewhere in this Lease, including Exhibit E hereto. (f) Final Inspection. Upon any Return Occasion, Lessee shall make the Engine available to Lessor at the location where the designated check or checks required hereunder to be performed immediately prior to redelivery is to be performed for detailed inspection of the documents referred to in paragraph (d) above and the Engine and Parts structure and parts, at Lessee's expense (excluding compensation to representatives of Lessor), in order to verify that the condition of such Engine complies with the requirements set forth above (such inspection being hereinafter referred to as the "Final Inspection"). The Final Inspection shall be combined with such check or checks and may include such other items as reasonably requested by Lessor. Lessee shall give Lessor not less than thirty (30) days prior written notice of the commencement date of such Final Inspection. The period allowed for the Final Inspection shall be the same period during which such checks are being performed and shall have such duration as to permit the opening of any areas of the Engine which are customarily necessary or advisable to satisfy Lessor as to compliance with the requirements of this Section 16 and Exhibit E. The Final Inspection shall commence on the date so noticed which shall be on or before the expiration of the Term with respect to the Engine and shall continue on consecutive days until all activity required above to be conducted has been concluded. To the extent that any portion of the Final Inspection extends beyond the expiration of the Term, unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to the Engine undergoing the Final Inspection shall be deemed to have been automatically extended, and all obligations hereunder continued, on a daily basis until the Final Inspection shall have been concluded and Lessee shall pay Rent during any such extension in an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value during such extension shall equal the Stipulated Loss Value on the last day of the Basic Term or Renewal Term, as the case may be); provided, however, that Lessee shall not be required to pay Rent with respect to the Engine during the period of extension to the extent that Lessor is responsible for the delay in completion of the Final Inspection. All storage expenses attributable to any Term extension pursuant to the preceding sentence shall be payable by Lessee, except -85- 86 that Lessee shall not be liable for any storage expenses which are incurred after the sixtieth (60th) day after the Term to the extent that storage continues thereafter due to Lessor's delay in completion of the Final Inspection. (g) Engine Records and Documents. In order to enable Lessor to prepare for the Final Inspection of the Engine pursuant to Subsection 16(f) above, Lessee agrees to make available to Lessor at a maintenance base of Lessee with adequate facilities for short-term maintenance, where the Final Inspection is to occur, not later than ten (10) days prior to the commencement of such Final Inspection, the Engine Records and Documents listed in Exhibit B hereto, together with such other documentation (including, without limitation, original airworthiness directive compliance documents and other work documents) regarding the condition, use, maintenance, or operation as Lessor may reasonably request or require to substantiate the status of the Engine. Such Records and Documents shall be sufficient to enable Lessor to trace the service history, accumulated cycles or flight hours as applicable and remaining service life of the Engine, including but not limited to a listing of each airframe on which the Engine has been installed. (h) Corrections and Subsequent Corrections. To the extent that the Engine fails upon a Return Occasion to conform to any requirement imposed by this Lease Lessor may, at its option, (i) continue the Lease in effect in the manner provided for in Section 16(f) above with regard to automatic extension until such time as the Engine is brought up to the condition required by this Section 16, including Exhibit E, or (ii) accept the return of the Engine and thereafter have any such nonconformance corrected, at such time as Lessor may deem appropriate but not to commence later than ninety (90) days following the return of the Engine, at commercial rates then charged by the Person selected by Lessor to perform such correction. Lessee's obligations to pay such Supplemental Rent shall survive the Expiration Date or other termination of this Lease. Nothing set forth in this paragraph shall constitute a limitation on Lessor's or Owner Participant's ability to recover from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the return of the Engine at the time, in the place and in the condition as specified in this Section 16 and Exhibit E hereto. (i) [Intentionally Left Blank]. (j) Exportation of the Engine. Lessee shall, at Lessee's expense, take such action as Lessor may reasonably -86- 87 request to assist Lessor in obtaining any required documents in relation to the export of the Engine from the United States (including, without limitation, a valid and subsisting export license). (k) Service Bulletin and Modification Kits. Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished without charge by the manufacturer for installation on the Engine which have not been so installed together with appropriate instructions for installation. In the event such uninstalled kits were purchased or manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and have a right of first refusal to purchase such kits at Lessee's cost for a period of ninety (90) days after return. (l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition to other storage referred to above, arrange for the parking, storage and insurance of the Engine for a period not exceeding sixty (60) days at such reasonable location as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay or cause to be paid all costs and expenses for such parking, storage and insurance. (m) Resale/Release Cooperation. During the last twelve (12) months of the Term, with reasonable notice and at reasonable times, Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable respects, with the efforts of Lessor to sell or lease the Engine after the end of the Term, by permitting prospective purchasers or lessees, except to the extent prohibited by applicable Law, to inspect the Engine and the records relating thereto to the extent it does not unreasonably interfere with the operation or maintenance of the Engine or the conduct of Lessee's business. Section 17. Events of Default. Any one or more of the following occurrences or events shall constitute an Event of Default (whether any 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 other Governmental Entity): (a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days, after the date on which such -87- 88 payment is due, or (ii) any other payment of Supplemental Rent due hereunder within ten Business Days, after the date on which such payment is due and Lessee has received written demand therefor by the party entitled thereto; provided that any failure of Lessee to pay to Lessor or Owner Participant when due any Excepted Payments (as defined in the Indenture) shall not constitute an Event of Default unless Lessor delivers notice to Lessee; or (b) Lessee shall fail to obtain and maintain in full force and effect any insurance required under the provisions of Section 12 hereof or shall operate the Engine outside of the scope or in violation of the terms of the insurance or United States Government indemnity coverage required to be maintained with respect to such Engine; or (c) Any representation or warranty made by Lessee herein or in the Refunding Agreement or in any certificate furnished by Lessee in connection herewith or therewith is or was incorrect at the time made in any material respect and such incorrectness shall not have been cured within thirty (30) days after the receipt by Lessee of a written notice from Lessor or the Indenture Trustee advising Lessee of the existence of such incorrectness; or (d) Lessee shall fail to perform or observe any covenant, condition, or agreement to be performed or observed by it pursuant to this Lease or the Refunding Agreement, and such failure shall continue uncured for thirty (30) days after written notice thereof is given by Lessor or Indenture Trustee to Lessee; provided, however, that if Lessee shall have undertaken to cure any such failure which arises under the first or second sentence of Section 6(c), or Section 6(d), as such provisions of Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in attempting to cure such failure, such failure is not cured within said thirty (30) day period but is curable with future due diligence, there shall exist no Event of Default under this Section 17 so long as Lessee is proceeding with due diligence to cure such failure and such failure is remedied not later than one hundred eighty (180) days after receipt by Lessee of such written notice; or (e) Lessee consents to the appointment of a custodian, receiver, trustee or liquidator of itself or all or any material part of Lessee's property or Lessee's consolidated property, or Lessee admits in writing its inability to, or is unable to, or does not, pay its debts generally as they come due, or makes a general assignment for the benefit of creditors, or Lessee files a voluntary -88- 89 petition in bankruptcy or a voluntary petition seeking reorganization in a proceeding under any bankruptcy or insolvency Laws (as now or hereafter in effect), or an answer admitting the material allegations of a petition filed against Lessee in any such proceeding, or Lessee by voluntary petition, answer or consent seeks relief under the provisions of any other bankruptcy, insolvency or other similar Law providing for the reorganization or winding-up of corporations, or provides for an agreement, composition, extension or adjustment with its creditors, or any corporate action (including, without limitation, any board of directors or shareholder action) is taken by Lessee in furtherance of any of the foregoing, whether or not the same is fully effected or accomplished; or (f) An order, judgment or decree is entered by any court appointing, without the consent of Lessee, a custodian, receiver, trustee or liquidator of Lessee, or of all or any material part of Lessee's property, or Lessee's consolidated property, or all or any material part of Lessee's property or Lessee's consolidated property is sequestered, and any such order, judgment or decree of appointment or sequestration remains in effect, undismissed, unstayed or unvacated for a period of ninety (90) days after the date of entry thereof or at any time an order for relief is granted; or (g) An involuntary petition against Lessee in a proceeding under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or dismissed within ninety (90) days thereafter or at any time an order for relief is granted in such proceeding, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction over, or custody or control of, Lessee or of all or any material part of Lessee's property, or Lessee's consolidated property and such jurisdiction, custody or control remains in effect, unrelinquished, unstayed or unterminated for a period of ninety (90) days or at any time an order for relief is granted in such proceeding; or (h) Lessee's cessation of business as a commercial passenger Certificated Air Carrier or, except in either case in connection with a labor dispute, announcement thereof or Lessee's suspension of its business as a commercial passenger Certificated Air Carrier, or for any reason the preponderant business activity of Lessee shall cease to be that of a commercial passenger Certificated Air Carrier; or -89- 90 (i) Lessee's loss or suspension of its United States air carrier license or certificate under Part 121 of the Federal Aviation Regulations or certificate under Section 41102(a) of the Federal Aviation Act. Section 18. Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare by written notice to Lessee this Lease to be in default, provided, however, that this Lease shall be deemed to be declared in default automatically without the necessity of such written declaration upon the occurrence of any Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof; and at any time thereafter, so long as any outstanding Event of Default shall not have been remedied, Lessor may do one or more of the following with respect to the Engine as Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable Law then in effect: (a) Demand that Lessee, and Lessee shall upon the written demand of Lessor and at Lessee's cost and expense, immediately return, and Lessee hereby agrees that it shall return promptly, the Engine to Lessor in the manner specified in such notice, in which event such return shall not be delayed for the purposes of complying with the return conditions specified in Section 16 and Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's possession of the Engine) or delayed for any other reason; provided, however, that Lessee shall remain and be liable to Lessor for amounts provided for herein or other damages resulting from the Engine not being in the condition required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be required thereafter to take such actions as would be required by the provisions of this Lease if the Engine were being returned at the end of the Term hereof with respect to the Engine. In addition, Lessor or Lessor's agent, at its option and to the extent permitted by applicable Law, may but shall not be obligated to enter upon the premises where the Engine is located to take immediate possession of and, at Lessor's option, remove the same by summary proceedings or otherwise, all without liability accruing to Lessor or Lessor's agent for or by reason of such entry or taking of possession or removal whether for the restoration of damage to property, or otherwise, caused by such entry or taking, except direct damages to the extent caused by Lessor's gross negligence or willful misconduct. -90- 91 (b) With or without taking possession thereof, sell or cause to be sold, the Engine or any part thereof, or Lessor's interest therein, at private or public sale, as Lessor in its sole discretion may determine, or otherwise dispose of, hold, use, operate, or lease to others, or keep idle the Engine, as Lessor in its sole discretion may determine, all free and clear of any rights of Lessee or any Permitted Sublessee and except as hereinafter set forth in this Section 18. Lessor may be the purchaser at any such sale. (c) Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment date which shall be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date specified for payment in such notice), any unpaid Rent for the Engine to and including the Stipulated Loss Value Date specified in such notice, plus whichever of the following amounts as Lessor may specify, in its sole and absolute discretion, in such notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair market sale value of the Engine as of the date specified in such notice or (ii) an amount equal to the excess, if any, of the sum of the Stipulated Loss Value for the Engine computed as of the date specified in such notice plus, if such date is a Basic Rent Payment Date or Renewal Rent Payment Date, an amount equal to the Basic Rent or the Renewal Rent, as the case may be, due on such date, over the fair market rental value of the Engine for the remainder of the Term as of the date specified in such notice. (d) In the event Lessor, pursuant to paragraph (b) above, shall have sold the Engine, or its interest therein, Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period commencing after the Stipulated Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent due to and including the -91- 92 date of sale, plus the amount by which the Stipulated Loss Value of the Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such sale (after deducting all costs of such sale). (e) In lieu of exercising its rights under paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in advance for the period on and after the Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such Engine due and unpaid for any period prior to and including, and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount equal to the Stipulated Loss Value for the Engine computed as of such Stipulated Loss Value Date; and upon such payment of liquidated damages and the payment of all other Rent then due hereunder and the discharge of the Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without recourse or warranty (except as to the absence of Lessor's Liens and the Lien of the Indenture), all right, title and interest of Lessor in and to the Engine to Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and deliver such documents evidencing such transfer and take such further action as Lessee shall reasonably request. (f) In the event that Lessor, pursuant to paragraph (b) above, shall have relet the or Engine under a long term lease, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to such or Engine, may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such Engine due after the time of reletting) any unpaid Rent for such Engine due up to the date of reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be, for such Engine which would otherwise have become due over the Basic Term or Renewal Term, as the case may be, discounted periodically (equal to installment frequency) to present worth as of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental payments to become due under the reletting from the date of such reletting to the date upon which the Term for the Engine would have expired but for Lessee's default, discounted periodically (equal to -92- 93 installment frequency) to present worth as of the date of the reletting at the rate of 8.50% per annum. (g) Cancel, rescind and/or terminate this Lease by written notice to Lessee which cancellation, rescission and/or termination shall be effective upon dispatch, whereupon Lessee's right to possess and use the Engine shall immediately cease, however, Lessee shall be and remain liable for damages and losses suffered by Lessor and all other amounts payable by Lessee hereunder. (h) Lessor may exercise any other right or remedy which may be available to it under applicable laws, or may proceed by appropriate court action or actions, either at law or in equity, to enforce any other remedy or right Lessor may have hereunder, under the other Operative Documents, at law or in equity, including, without limitation, proceed by court order to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof. In addition to the foregoing, Lessee shall be liable (without duplication of the remedies above and of Lessee's obligations under Section 10 and Section 13 hereof and subject to the exclusions set forth therein) for any and all unpaid Rent before, during or after the exercise of any of the above mentioned remedies (including without limitation interest on unpaid amounts with respect to all amounts not paid when due, including, without limitation, any amounts payable pursuant to the foregoing provisions of this Section 18), and, except as specified above, until satisfaction of all of Lessee's obligations to Lessor hereunder and for all legal fees and other costs and expenses incurred by any Indemnitee by reason of the occurrence of any Event of Default or the exercise of an Indemnitee's remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Engine in accordance with the terms of Section 16 and Exhibit E hereof or in placing the Engine in the condition and with airworthiness certification as required by such Section and such Exhibit and costs and expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or each Liquidity Facility. All liquidated damages payable pursuant to the foregoing shall bear interest, which shall be payable on the date the payment of such liquidated damages is due at a rate equal to the Interest Rate from and including the date due to and excluding the date actually paid. -93- 94 In effecting any repossession, Lessor, its representatives and agents, to the extent permitted by applicable Law, (i) shall have the right to enter upon any premises where it reasonably believes the Engine or Part to be located, (ii) shall not be liable, in conversion or otherwise, for the taking of any personal property of Lessee which is in or attached to the Engine or Part which is repossessed, (iii) shall not be liable or responsible, in any manner, for any damage or injury to any of Lessee's property in repossessing and holding the Engine or Part, except for direct damages caused by Lessor's gross negligence or willful misconduct, and (iv) shall have the right to maintain possession of and dispose of the Engine or Part on any premises owned by Lessee or under Lessee's control. If requested by Lessor, Lessee shall, at its sole expense, assemble and make the Engine or Part available at a place designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or repossession by Lessor of the Engine or Part, or otherwise upon the occurrence of an Event of Default, any rights in any warranty (express or implied), service life policy, infringement indemnity, performance guaranty or the like heretofore made available to Lessee or otherwise held by Lessee shall without further act, notice or writing be deemed automatically cancelled and shall be enforceable solely by and for the benefit of, and assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for all expenses, disbursements, costs and fees incurred in (i) repossessing, storing, preserving, shipping, maintaining, repairing and refurbishing the Engine or Part to the condition required by Section 16 and Exhibit E hereof and (ii) preparing the Engine or Part for sale or lease, advertising the sale or lease of the Engine or Part and selling or releasing the Engine or Part. Lessor is hereby authorized and instructed, at its option, to make expenditures which Lessor considers advisable to repair and restore the Engine or Part to the condition required by Section 16 and Exhibit E hereof, all at Lessee's sole expense. For the purpose of this Section 18, the "fair market rental value" or the "fair market sales value" of the Engine or Part shall be determined pursuant to the Appraisal Procedure. At any sale of the Engine or Part pursuant to this Section , Owner Participant may bid for and purchase such property and Lessee agrees that the amounts paid therefor -94- 95 shall be used in the computations contemplated herein and Lessee shall remain liable for any deficiency. No remedy referred to in this Section is intended to be exclusive, but, to the extent permitted by Law, each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity; and, to the extent permitted by Law, the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of the same Event of Default in the future or any other prior or future Event of Default. To the extent permitted by Law, Lessee hereby waives any right it may have to require Lessor to mitigate damages in connection with the remedies described in Sections 18(c), (d), (e) or (f) above. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact (which appointment is coupled with an interest) to execute all documents deemed necessary to release, terminate and void Lessee's interest in the Engine leased hereunder or otherwise to more effectively carry out Lessor's rights and remedies and to file said documents for recordation with the FAA, under the Uniform Commercial Code, and with any other appropriate Governmental Entity, and otherwise act in Lessee's name and place with respect to the Engine, provided that an Event of Default has occurred and is continuing and this Lease has been declared or deemed to be in default. The provisions of this Section 18 shall continue in full force and effect and survive the expiration or other termination of this Lease and are expressly made for the benefit of and shall be enforceable by Lessor, Owner Participant and, if the Lien of the Indenture has not been discharged, Indenture Trustee. Section 19. Security for Obligations. Security for Obligations. In order to secure the Equipment Notes, Lessor has created, by the Indenture, a security interest in the Trust Indenture Estate, including, without limitation, this Lease and all Rent and other sums payable hereunder, except as provided in the Indenture and subject in each case to Liens permitted hereunder. The Indenture provides, among other things for the assignment by Lessor to Indenture Trustee of its right, title and interest in, to and under this Lease, to the extent set forth in the Indenture, for the creation of a first-mortgage lien on and -95- 96 perfected security interest in all of Lessor's right, title and interest in and to the Engine in favor of Indenture Trustee. Lessee hereby consents to such assignment and to the creation of such mortgage and security interest and acknowledges receipt of copies of the Trust Agreement and the Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Indenture has been discharged, Lessee will furnish to Indenture Trustee counterparts of all notices and other writings of any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value and all other amounts payable hereunder (other than Excepted Payments) to or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but not Owner Participant) (other than Expected Rights) herein as and to the extent provided herein or in the Indenture and any express reference to Indenture Trustee in any Section of this Lease shall not give rise to any implication that Indenture Trustee may not exercise the rights of Lessor in any other Section of this Lease as and to the extent provided in the Indenture. The provisions of this Lease and the Refunding Agreement which require or permit action by, the payment of monies to, the consent or approval of, the furnishing of any instrument or information to, or the performance of any other obligation to, Indenture Trustee, shall not be effective, and the Sections hereof containing such provisions shall be read as though there were no such requirements or provisions and all moneys otherwise payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee shall have received from Indenture Trustee notice of discharge of the Lien of the Indenture. Any payment or performance by Lessee to or as directed by Indenture Trustee shall constitute payment or performance of such obligation to Lessor by Lessee under this Lease. Any payment or performance of an obligation of Lessee under this Lease by a Permitted Sublessee shall constitute payment or performance of such obligation by Lessee. -96- 97 Section 20. Renewal Option. Renewal Option. Lessee may renew this Lease as provided in the following clause (i) and subject to the following clause (ii): (i) Exercise of Renewal Option. Provided that this Lease has not been previously terminated and that no Default or Event of Default shall have occurred and be continuing at the time of the giving of irrevocable notice hereinafter referred to in this clause (i) or at the time of the commencement of the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal Term consisting of a period equal to five years. The right to renew this Lease for such Renewal Term pursuant to this clause (i) shall be exercised upon irrevocable notice from Lessee received by Lessor of Lessee's election to so renew this Lease not less than twelve (12) months and not more than twenty-four (24) months prior to the last day of the Basic Term. The Renewal Rent for the Renewal Term shall be the "fair market rental value" of the Engine for such Renewal Term (the "renewal fair market rental value") as determined in accordance with the Appraisal Procedure. For purposes of this paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to exercise its option to extend the term of this Lease for the Renewal Term in accordance with the provisions of this paragraph, all of Lessee's rights to extend the Term for such Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred by Lessor, Owner Participant and the Indenture Trustee in connection with the exercise of such option. (ii) Provisions Applicable During Renewal Term. All provisions of this Lease, including, without limitation, as to Rent and Stipulated Loss Value (which shall be, with appropriate adjustments, in no event less than the greater of 120% of the "fair market sales value" of the Engine as of the first day of the Renewal Term as determined pursuant to the Appraisal Procedure or the amount set forth on Exhibit A as of the end of the Basic Term), shall remain in effect and be applicable during such Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as determined in accordance with clause (i) of this Section 20. -97- 98 Section 21. Miscellaneous. (a) Severability, Amendment, and Construction. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, each of Lessor and Lessee hereby waives any provision of Law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged, or terminated orally, but only by an instrument in writing expressed to be a supplement or amendment to, or waiver or termination of this Lease signed by an officer of the party against which the enforcement of the change, waiver, discharge, or termination is sought. This Lease shall constitute an agreement of lease, and nothing herein shall be construed as conveying to Lessee any right, title, or interest in the Engine or any Part except as a lessee only. Without limiting the foregoing, the parties hereto agree to treat this Agreement as a lease for United States federal income tax purposes and Lessee will not file a tax return which is inconsistent with the foregoing and nothing contained herein shall be construed as an election by Lessor to treat Lessee as having acquired the Engine for the purpose of the investment credit allowed by Section 38 of the 1954 Code or any similar or successor statute. The headings in this Lease are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (c) Notices. All notices and instructions between Lessor and Lessee required or permitted under the terms and provisions hereof shall be in writing and shall be sent to Lessor or Lessee at their respective addresses set forth in Exhibit C hereto (or such other addresses as the parties may designate from time to time in writing). All notices, reports or other documents provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee -98- 99 (until such time as the Lien of the Indenture is discharged) and to Owner Participant, at such address as Owner Participant and Indenture Trustee, respectively, may designate from time to time. All notices and instructions hereunder shall become effective when received. (d) Lessor's Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any covenant, agreement, or obligation contained herein, Lessor shall have the right but not the obligation to make such payment or conform or comply with such agreement, covenant, or obligation, and the amount of such payment and the amount of the reasonable expenses of Lessor incurred in connection with such payment or the performance thereof or compliance therewith, together with interest thereon at the Interest Rate, shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of any such action by Lessor pursuant to this Section 21(d) shall not constitute a waiver or release of any obligation of Lessee under this Lease, nor a waiver of any Event of Default which may arise out of Lessee's nonperformance of such obligation, nor an election or waiver by Lessor or any remedy or right available to Lessor under or in relation to this Lease. (e) Counterparts. To the extent, if any, that this Lease 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 may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as the counterpart containing the receipt therefor executed by or on behalf of Indenture Trustee on the signature page thereof. Subject to the preceding sentence, this Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Quiet Enjoyment. Lessor covenants that, so long as no Event of Default shall have occurred and be continuing and this Lease has not been declared or deemed to be in default, Lessor shall not take or cause to be taken any action to interfere with the right of Lessee to the possession, use, operation and quiet enjoyment of and other rights with respect to the Engine hereunder, and all rents, revenues, profits and income therefrom, in accordance with the terms of this Lease without interference from Lessor or any Person lawfully claiming by or through it, provided that Lessor and Owner Participant shall not be liable for any such interference by Indenture Trustee, Pass Through -99- 100 Trustee, Note Holder or any other Person lawfully, claiming by or through them, and provided further, that the foregoing shall not be deemed to have modified the obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain absolute and unconditional. (g) Brokers. Lessee and Lessor agree that, except as provided in the Refunding Agreement, there has been no third party as agent involved in this Lease and each indemnifies the other from liability for fees, commissions, or other claims made upon the other due to any such claim. (h) Investment of Funds. Any monies which are held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or an Event of Default shall have occurred and be continuing, be invested as provided below until paid to Lessee or applied by Lessor or Indenture Trustee to the extent provided herein. Until paid to Lessee or applied as provided herein or in the Indenture such monies shall be invested by Lessor or Indenture Trustee from time to time at the expense of Lessee in Specified Investments, as directed by Lessee in accordance with the provisions of Section 3.07 of the Indenture if the Lien of the Indenture shall not have been discharged and thereafter as provided below. There shall be promptly (but not more frequently than monthly) remitted to Lessee any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) unless a Default or an Event of Default shall have occurred and be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the amount of any loss realized as the result of any such investment (together with any Taxes, fees, commission and other reasonable expenses, if any, incurred in connection with such investment). (i) Entire Agreement; Amendment. This Lease (including the Exhibits hereto), any related letter agreements and the other Operative Documents, the Financing Documents and the Purchase Documents (including the Exhibits thereto) and all closing documents delivered in connection with any of the foregoing embody the entire agreement and understanding among the parties hereto with respect to the subject matter hereof. This Lease may be changed, waived, discharged, amended, revised or terminated only by an instrument in writing signed by the party against which enforcement is sought. -100- 101 (j) Expenses. Without limiting Section 13 or 18, Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor for all reasonable out-of-pocket costs and expenses (including, without limitation, legal and other professional fees and expenses) incurred or payable by Lessor in connection with or related to (i) the fees and expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by or relating to acts or omissions of Lessee or as otherwise provided herein or to give effect to the provisions hereof, or the other Operative Documents, the Financing Documents or the Purchase Documents, any future amendments, supplements or other modifications hereof or thereof, or waivers or consents hereunder or thereunder, and (iii) any Default or Event of Default or the enforcement of any of Lessor's rights, remedies or privileges hereunder or at law or in equity, but not Lessor's legal fees and expenses in connection with the negotiation and execution of this Lease or the Financing Documents. (k) Federal Bankruptcy Code. In the event Section 1110 of Title 11 of the United States Code is amended, or if it is repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take such other action not inconsistent with this Lease as Lessor reasonably deems necessary so as to afford to Lessor the rights and benefits as such amended or substituted statute confers upon owners and lessors of aircraft engines similarly situated to Lessor. (l) [Intentionally Left Blank]. (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby irrevocably agrees that any suit, action or proceeding related to this Lease or any of the other Operative Documents to which it is a party or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may be instituted in, and submits for itself and its property to the non-exclusive jurisdiction of, (i) the courts of the State of New York in New York County and (ii) the United States District Court for the Southern District of New York. Each of Lessee and Lessor represents and warrants that it is not currently entitled to, and agrees that to the extent that Lessee or Lessor hereinafter may acquire, any immunity (including, without limitation, sovereign immunity) from jurisdiction of any court or from any legal process, it hereby, to the extent permitted by Law, waives such immunity, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to -101- 102 the jurisdiction of the above-named courts that it is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Lease or any of the other Operative Documents or the subject matter hereof or thereof or any of the transactions contemplated hereby and thereby may not be enforced in or by such courts. Each of Lessee and Lessor hereby generally consents to service of process by registered mail, return receipt requested, addressed to it at its address set forth in Exhibit C, or at such other office of Lessee or Lessor as from time to time may be designated by Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees that its submission to jurisdiction and its designation of service of process by mail set forth above is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each Note Holder and their successors and assigns (as applicable). Final (after all appeals) judgment (the enforcement of which has not been stayed) against either Lessee or Lessor obtained in any suit originally brought in the court of the State of New York in New York County or in the United States District of New York shall be conclusive, and, to the extent permitted by applicable Law, may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Lessee therein described; provided that the plaintiff at its option may bring suit, or institute other judicial proceedings, against Lessee or Lessor, as the case may be, or any of their assets in the courts of any country or place where such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and other common law and statutory claims. Lessor and Lessee represent and warrant that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this -102- 103 Agreement may be filed as a written consent to a trial by the court. (n) Limitation on Recourse. The parties hereto agree that all statements, representations, covenants and agreements made by Lessor (when made in its capacity as such and not in its individual capacity) contained in this Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies that can be exercised and enforced against the Trust Estate. Therefore, no recourse shall be had with respect to anything contained in this Agreement (except for any express provisions that Lessor is responsible for in its individual capacity), against Lessor in its individual capacity or against any institution or person that becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided that (i) this Section 21(n) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable and (ii) nothing contained in this Section 21(n) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 21(n) shall survive the termination of this Agreement and the other Operative Documents. (o) Successor Trustee. Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Engine for all purposes hereof without the necessity of any consent or approval by Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any way altering the terms of this Lease or Lessee's obligations hereunder. One such appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor Owner Trustees pursuant to the Trust Agreement, but such right may be exercised repeatedly as long as this Lease shall be in effect. (p) Article 2-A of the UCC. The parties hereto agree that the Original Head Lease, as amended and restated by this Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] (and as otherwise extended, amended, modified, renewed or supplemented), shall be governed by Article 2-A of the Uniform Commercial Code of New York. -103- 104 IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due authority, have each caused this Lease to be executed by its duly authorized officer as of the day and year first above written. Lessor: WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:_______________________________________ Title: Lessee: AMERICA WEST AIRLINES, INC. By:_______________________________________ Title: -104- 105 The undersigned acknowledges receipt of this original counterpart of the foregoing Lease on this ____ day of November, 1996 and consent to the terms hereof. FLEET NATIONAL BANK, not in its individual capacity, but solely as Indenture Trustee By:_______________________________________ Title: -105- 106 TABLE OF CONTENTS
Page ---- Section 1. Definitions..................................................... 1 Section 2. Agreement to Lease.............................................. 19 Section 3. Delivery and Acceptance; Term................................... 19 (a) Time of Delivery........................................ 19 (b) [Intentionally Left Blank.]............................. 19 (c) Acceptance of Engine.................................... 19 (d) Term of Lease........................................... 20 Section 4. Rent............................................................ 20 (a) Rent.................................................... 20 (b) Minimum Payments........................................ 20 (c) Date, Place and Method of Payment....................... 21 (d) Prohibition Against Setoff, Counterclaim, Etc....................................... 21 Section 5. Representations, Warranties and Covenants....................... 23 (a) Warranties and Disclaimer of Warranties.............................................. 23 (b) Representations and Warranties of Lessor. ............................................. 24 (c) No Amendments to Financing Documents.................... 24 (d) Suppliers' Warranties................................... 25 Section 6. Possession and Use.............................................. 25 (a) Possession.............................................. 25 (b) [Intentionally Left Blank].............................. 32 (c) Lawful Insured Operations............................... 32 (d) Maintenance............................................. 33 (e) Registration and Insignia............................... 35 Section 7. Inspection...................................................... 35 Section 8. Additional Covenants of Lessee.................................. 36 (a) Financial Information................................... 36 (b) Maintenance of Corporate Existence...................... 38 (c) Maintenance of Status................................... 38 (d) Payment of Taxes........................................ 38 (e) Consolidation, Merger, Etc.............................. 39 (f) Information............................................. 40 (g) Place of Business....................................... 40 (h) Certain Limitations on Use.............................. 40 (i) Section 1110............................................ 41 (j) Permits and Licenses.................................... 41 (k) Security Opinion; Annual Certificate.................... 41 (l) Letter of Credit........................................ 43
107
Page ---- Section 9. Replacement of Parts; Alterations, Modifications and Additions..................................... 45 (a) Replacement of Parts.................................... 45 (b) Alterations, Modifications and Additions............................................... 46 (c) Pooling................................................. 48 Section 10. General Tax Indemnity........................................... 49 (a) Indemnity............................................... 49 (b) Exclusions.............................................. 51 (c) Covered Income Tax...................................... 53 (d) Reports and Returns..................................... 55 (e) After-Tax Basis......................................... 55 (f) Tax Benefit............................................. 56 (g) Payment................................................. 56 (h) Contest................................................. 57 (i) Refund.................................................. 59 (j) Diligence............................................... 59 (k) Affiliated Group........................................ 59 (l) Verification............................................ 60 (m) Survival................................................ 60 Section 11. Loss, Damage and Requisition.................................... 60 (a) Event of Loss with Respect to the Engine.............................................. 60 (b) Conveyance of Replacement Engine........................ 62 (c) Application of Proceeds and Payments.................... 64 (d) Requisition for Use by Government with Respect to the Engine.............................. 65 (e) Application in Default.................................. 65 Section 12. Insurance....................................................... 66 (a) Public Liability and Property Damage Insurance........................................ 66 (b) Insurance Against Loss or Damage........................ 67 (c) Application of Insurance Proceeds for an Event of Loss.................................... 70 (d) Application of Insurance Proceeds for Other than an Event of Loss............................. 71 (e) Application in Default.................................. 71 (f) Certificates............................................ 72 (g) Reinsurance............................................. 72 (h) Storage................................................. 73 (i) Amounts Held............................................ 73 (j) After the Term.......................................... 74 (k) Governmental Indemnity.................................. 74 Section 13. General Indemnity............................................... 74
-ii- 108
Page ---- Section 14. Liens........................................................... 79 Section 15. Protection of Title and Further Assurances...................................................... 80 Section 16. Return of Engine and Records.................................... 82 (a) Return.................................................. 82 (b) Status Upon Return...................................... 82 (c) Substitute Engine....................................... 83 (d) Records and Documents................................... 83 (e) Condition of Engine..................................... 85 (f) Final Inspection........................................ 85 (g) Engine Records and Documents............................ 86 (h) Corrections and Subsequent Corrections............................................. 86 (i) [Intentionally Left Blank].............................. 86 (j) Exportation of the Engine............................... 86 (k) Service Bulletin and Modification Kits.................................................... 87 (l) Storage Upon Return..................................... 87 (m) Resale/Release Cooperation.............................. 87 Section 17. Events of Default............................................... 87 Section 18. Remedies........................................................ 90 Section 19. Security for Obligations........................................ 95 Section 20. Renewal Option.................................................. 97 Renewal Option.................................................. 97 Section 21. Miscellaneous................................................... 98 (a) Severability, Amendment, and Construction............... 98 (b) GOVERNING LAW........................................... 98 (c) Notices................................................. 98 (d) Lessor's Right to Perform for Lessee.................... 99 (e) Counterparts............................................ 99 (f) Quiet Enjoyment......................................... 99 (g) Brokers.................................................100 (h) Investment of Funds.....................................100 (i) Entire Agreement; Amendment.............................100 (j) Expenses................................................101 (k) Federal Bankruptcy Code.................................101 (l) [Intentionally Left Blank]..............................101 (m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial........................101 (n) Limitation on Recourse..................................103 (o) Successor Trustee.......................................103
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Page ---- (p) Article 2-A of the UCC..................................103
ANNEXES Annex A - Description of Original Head Lease EXHIBITS Exhibit A - Stipulated Loss Values Exhibit B - Engine Records and Documents Exhibit C - Definitions and Values Exhibit D-1 - Lease Supplement No. 2 Exhibit D-2 - Letter of Credit Exhibit E - Return Condition Requirements Exhibit F-1 - Foreign Air Carriers Exhibit F-2 - Permitted Foreign Sublessee Domiciles Exhibit F-3 - Permitted Sublessee Assignment Consent Exhibit G - [Intentionally Left Blank] Exhibit H - [Intentionally Left Blank] Exhibit I - [Intentionally Left Blank] Exhibit J - [Intentionally Left Blank] Exhibit K - Form of Engine Status Report -iv- EX-4.33 34 RESTATED TRUST INDENTURE [GPA 1989 BN-5] 1 EXHIBIT 4.33 - ------------------------------------------------------------------------------- SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-5] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and THE CHASE MANHATTAN BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - ------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 55 Registration No. N624AW Leased by America West Airlines, Inc. - ------------------------------------------------------------------------------- 2 TABLE OF CONTENTS Page ---- GRANTING CLAUSE................................................ 3 HABENDUM CLAUSE................................................ 7 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions............................. 9 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes......................... 23 SECTION 2.02. Issuance and Terms of Equipment Notes........... 29 SECTION 2.03. Payments from Trust Indenture Estate Only.......................................... 32 SECTION 2.04. Method of Payment............................... 34 SECTION 2.05. Application of Payments......................... 36 SECTION 2.06. Termination of Interest in Trust Indenture Estate.............................. 37 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes............................... 37 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes............................... 39 SECTION 2.09. Payment of Expenses on Transfer; Cancellation.................................. 39 SECTION 2.10. Mandatory Redemptions of Equipment Notes......................................... 40 SECTION 2.11. Redemptions; Notice of Redemption............... 40 SECTION 2.12. Option to Purchase Equipment Notes.............. 41 SECTION 2.13. Subordination................................... 42 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions...................... 43 SECTION 3.02. Event of Loss and Replacement................... 44 SECTION 3.03. Payment After Indenture Event of Default, etc.................................. 46 SECTION 3.04. Certain Payments................................ 48 SECTION 3.05. Other Payments.................................. 49 SECTION 3.06. Payments to Owner Trustee....................... 50 SECTION 3.07. Investment of Amounts Held by Indenture Trustee....................................... 50 Trust Indenture 3 - ii - Page ---- ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee....................................... 51 SECTION 4.02. Indenture Events of Default..................... 52 SECTION 4.03. Certain Rights.................................. 55 SECTION 4.04. Remedies........................................ 57 SECTION 4.05. Return of the Aircraft, etc..................... 60 SECTION 4.06. Remedies Cumulative............................. 62 SECTION 4.07. Discontinuance of Proceedings................... 62 SECTION 4.08. Waiver of Past Indenture Defaults............... 62 SECTION 4.09. Indenture Trustee May Prove Debt................ 63 SECTION 4.10. Limitations on Suits by Note Holders............ 65 SECTION 4.11. Unconditional Right of Note Holders to Receive Principal, Interest and Premium, and to Institute Certain Suits................ 65 SECTION 4.12. Exercise of Remedies by Foreign Note Holders....................................... 65 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default............ 66 SECTION 5.02. Action Upon Instructions........................ 67 SECTION 5.03. Indemnification................................. 68 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions..................... 68 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions.......... 69 SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts................. 69 SECTION 5.07. Indenture Supplements for Replacements.......... 73 SECTION 5.08. Effect of Replacement........................... 73 SECTION 5.09. Notices, etc.................................... 73 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant............................. 74 SECTION 5.11. Evidence of Action Taken by Note Holder......... 76 SECTION 5.12. Right of Revocation of Action Taken............. 76 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties................. 77 SECTION 6.02. Absence of Duties............................... 77 SECTION 6.03. No Representations or Warranties as to Trust Indenture 4 - iii - Page ---- Aircraft or Documents........................ 78 SECTION 6.04. No Segregation of Moneys; No Interest.......... 78 SECTION 6.05. Reliance; Agents; Advice of Counsel............ 79 SECTION 6.06. Capacity in Which Acting....................... 80 SECTION 6.07. Compensation................................... 80 SECTION 6.08. May Become Note Holder......................... 80 SECTION 6.09. Further Assurances; Financing Statements................................... 80 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification....................... 80 SECTION 7.02. Exculpation and Release of Liability........... 82 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee.............. 82 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor............ 82 SECTION 8.03. Appointment of Separate Trustees............... 84 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures.................................... 86 SECTION 9.02. Effect of Supplemental Indenture................ 89 SECTION 9.03. Documents to Be Given to Trustee................ 89 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures....................... 89 SECTION 9.05. Trustees Protected.............................. 90 SECTION 9.06. Documents Mailed to Note Holders................ 90 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement............ 90 SECTION 9.08. Notices to Liquidity Provider................... 90 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture........................ 91 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders........................ 91 SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding.................................... 91 Trust Indenture 5 - iv - Page ---- SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders....................... 92 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease............................... 92 SECTION 10.06. Notices......................................... 92 SECTION 10.07. Severability.................................... 93 SECTION 10.08. No Oral Modifications or Continuing Waivers....................................... 93 SECTION 10.09. Successors and Assigns.......................... 93 SECTION 10.10. Headings........................................ 93 SECTION 10.11. Normal Commercial Relations..................... 93 SECTION 10.12. Governing Law; Counterpart Form................. 94 SECTION 10.13. Section 1110.................................... 94 SECTION 10.14. JL Security Agreement........................... 94 EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements Trust Indenture 6 SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-5] SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-5] (this "Second Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-5] No. 1 dated September 25, 1989, as further supplemented by Trust Agreement Supplement [GPA 1989 BN-5] No. 2 dated October 24, 1991, and as further supplemented by Trust Agreement Supplement [GPA 1989 BN-5] No. 3 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as supplemented by Trust Indenture Supplement No. 1 dated September 25, 1989, which were recorded by the Federal Aviation Administration on September 26, 1989 as one instrument and assigned Conveyance No. G75346 (as so supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Trust Indenture 7 - 2 - Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as supplemented by Lease Supplement [GPA 1989 BN-5] No. 1 dated September 25, 1989, which were recorded by the Federal Aviation Administration on September 26, 1989 as one instrument and assigned Conveyance No. G75347 (as so supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Original Loan Participants (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into an Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as of October 1, 1991, as supplemented by the Trust Indenture Supplement No. 2 [GPA 1989 BN-5], dated October 24, 1991, which were recorded by the Federal Aviation Administration on November 12, 1991 as one document and assigned Conveyance No. Z91420, and as amended by Amendment No. 1 to Trust Indenture and Security Agreement dated as of September 3, 1996 which was recorded by the FAA on September 27, 1996 and assigned Conveyance No. Z99588 and as further amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of September 30, 1996 which was recorded by the FAA on November 12, 1996 and assigned Conveyance No. P08720 (as amended, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into an Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5] dated as of October 1, 1991, which amended and restated the Original Lease, as supplemented by Lease Supplement [GPA 1989 BN-5] No. 2 dated October 24, 1991, which were recorded by the Federal Aviation Administration on November 12, 1991 as one document and assigned Conveyance No. Z91421 (as amended, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Lease") and (iii) pursuant to the First Amended and Restated Indenture, the Owner Trustee issued and sold to the Certificate Holders (as defined in the First Amended and Restated Indenture) Equipment Trust Certificates, Series BN-5 in exchange for the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the First Amended and Restated Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-5] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Second Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and (ii) cause the implementation of the Trust Indenture 8 - 3 - Refinancing Transaction pursuant to which, among other things, the Equipment Trust Certificates issued to the Certificate Holders pursuant to the First Amended and Restated Indenture shall be redeemed and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Second Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the First Amended and Restated Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Second Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts Trust Indenture 9 - 4 - from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments (which collectively, excluding Excepted Payments but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under any of the Lease, the Japanese Lease Agreement or the Japanese Lease Assignment, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement (to the extent assigned by the Purchase Agreement Assignment); the Purchase Agreement Assignment; the Consents and Agreements; the Japanese Lease Agreement, the Japanese Lease Supplement, the Supplemental Agreement, the Assumption Agreement, the Confirmation Agreement, the FUYO Guaranty, the JL Security Agreement and the Omnibus Agreement (each to the extent assigned by the Japanese Lease Assignment); the Japanese Lease Assignment; all documents and property and interest therein assigned by the Japanese Lease Assignment to the extent not otherwise covered; the Manufacturer's Trust Indenture 10 - 5 - Warranty Bill of Sale; the BFE Bill of Sale; each notice, letter agreement or other document related to any of the foregoing entered into by or for the benefit of the Owner Trustee (or assigned to the Owner Trustee); in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Aircraft or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default or any "Event of Default" under and as defined in the Japanese Lease Agreement, and (y) any right to restitution from the Lessee, the Manufacturer or any other Person in respect of any determination of invalidity of any such document, it being agreed that the rights, powers and remedies referred to in the preceding clauses (x) and (y) are presently assigned and transferred to the Indenture Trustee and may, except as provided in Section 5.10 or elsewhere in this Indenture, be exercised by the Indenture Trustee without the necessity of proceeding under Section 4.04 to exercise remedies hereunder; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval under or with respect of any thereof or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or otherwise, arising out of any default under any Assigned Sublease, it being agreed that the rights, powers and remedies referred to above in this paragraph (3) are presently assigned and transferred to the Indenture Trustee and may, except as provided in Section 5.10 or elsewhere in this Indenture, be exercised by the Indenture Trustee without the necessity of proceeding under Section 4.04 to exercise remedies hereunder; Trust Indenture 11 - 6 - (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Owner Trustee in and to the same and every part thereof; (5) all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease and/or the Japanese Lease Agreement), and all insurance proceeds with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement and the Consents and Agreements, and execution copies of the Purchase Agreement Warranties Assignment, the Japanese Lease Agreement, the Japanese Lease Supplement, the Japanese Lease Assignment, the Assumption Agreement, the Confirmation Agreement, the FUYO Guaranty, the Supplemental Agreement, the JL Security Agreement, the original Manufacturer's Warranty Bill of Sale and the original BFE Bill of Sale. Concurrently with the delivery of the First Amended and Restated Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the First Amended and Restated Lease and Lease Supplement No. 2. Concurrently with the delivery of this Second Amended and Restated Indenture, the Owner Trustee is delivering to the Trust Indenture 12 - 7 - Indenture Trustee the chattel paper original executed counterparts of the Second Amended and Restated Lease and Lease Supplement No. 3. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the 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 and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or Trust Indenture 13 - 8 - 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 the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments, (i) accept any payment from the Lessee, any Permitted Sublessee, FUYO or the Japanese Lessor under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or Trust Indenture 14 - 9 - consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. Trust Indenture 15 - 10 - "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Assumption Agreement" means, collectively, the two Assumption Agreements dated as of September 22, 1989 between GPA Offshore and the Grand Cayman branch of the Japanese Lender. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended. "BFE Bill of Sale" means the full warranty (as to title) bill of sale covering the Buyer Furnished Equipment, transferring all right, title and interest therein to the Owner Trustee. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. Trust Indenture 16 - 11 - "Confirmation Agreement" means, collectively, Confirmation No.1 and Confirmation No. 2. "Confirmation No. 1" has the meaning set forth in Appendix X to the Japanese Lease Agreement. "Confirmation No. 2" has the meaning set forth in Appendix X to the Japanese Lease Agreement. "Consents and Agreements" means both the Consent and Agreement [GPA 1989 BN-5] of the Manufacturer and the Consent and Agreement [GPA 1989 BN-5] of the Manufacturer's Subsidiary, each dated as of the Delivery Date and attached to the Purchase Agreement Assignment. "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 450 West 33rd Street, New York, New York 10001, Attention: Corporate Trust Department, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C and Series D, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means September 25, 1989. "Deposit Agreement" means the Deposit Agreement dated as of September 22, 1989 between Barclays Bank PLC, a public limited company organized under the laws of England and acting through its branch office in Grand Cayman and the Designated Financial Institution (as described in Section 3 of Confirmation No. 2). "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. Trust Indenture 17 - 12 - "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to Section 13 of the Lease and not in support of any payment obligation of the Owner Trustee under any Indenture Document, (ii) any proceeds of public liability insurance in respect of the Aircraft payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Aircraft by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Trust Indenture 18 - 13 - Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee, or any of their respective successors, permitted assigns, directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Guarantor under the Tax Indemnification Agreement, as the case may be, and not in support of any payment obligation of the Owner Trustee under any Indenture Document, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Lease, and (vii) subject to the last sentence of Section 5.10 hereof, any right to enforce the payment of any amount described in clauses (i) through (vi) above and the proceeds thereof. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "First Japanese Lease Assignment" means the Lease Assignment [GPA 1989 BN-5] dated as of September 28, 1989 between GPA Offshore and the Original Head Lessee. "FUYO" means FUYO General Lease Co., Ltd., a corporation organized under the laws of Japan, and its successors and assigns under the Japanese Financing Documents. "FUYO Guaranty" means the Guaranty Agreement dated as of September 22, 1989 from FUYO for the benefit of the "Lessee" (under and as defined in the Japanese Lease Agreement) and such "Lessee's" successors and permitted assigns. Trust Indenture 19 - 14 - "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "GPA Offshore" means Air Tara Caymans I, Limited, a Cayman Islands corporation wholly-owned by the Parent Guarantor, and its successors and permitted assigns under the Japanese Financing Documents. "Indenture," "this Indenture," and "the Indenture" mean this Second Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); the original Manufacturer's Warranty Bill of Sale; any Sublease Assignment; any Assigned Sublease; the Purchase Agreement, (to the extent assigned to or for the benefit of the Owner Trustee); the Purchase Agreement Warranties Assignment; the Consents and Agreements; the BFE Bill of Sale; the Japanese Lease Agreement; the Japanese Lease Supplement; the Supplemental Agreement; the FUYO Guaranty; the Assumption Agreement; the Confirmation Agreement; the JL Security Agreement; the Omnibus Agreement and the other Japanese Financing Documents (each to the extent assigned by the Japanese Lease Assignment); and the Japanese Lease Assignment. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Aircraft and any Replacement Trust Indenture 20 - 15 - Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated September 25, 1989, which was recorded as one instrument by the FAA with the Original Indenture, Trust Indenture Supplement No. 2 dated October 24, 1991, which was recorded as one instrument by the FAA with the First Amended and Restated Indenture, and Trust Indenture Supplement No. 3 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this Second Amended and Restated Indenture. "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Japanese Financing Documents" means, collectively, the Omnibus Agreement, the Japanese Loan Agreement, the Japanese Security Agreement, the Japanese Lease Agreement, the Japanese Lease Supplement, the Supplemental Agreement, the Deposit Agreement, the FUYO Guaranty, the Assumption Agreement, the Confirmation Agreement, the JL Security Agreement, the Japanese Lease Assignment and any other documents or agreements referred to in the Japanese Lease Assignment. "Japanese Lease Agreement" means the Lease Agreement dated as of September 22, 1989 between the Japanese Lessor, as lessor, and GPA Offshore, as lessee, which with the Japanese Lease Supplement, the Supplemental Agreement and the Japanese Lease Assignment attached was recorded as one instrument by the FAA on September 26, 1989 and assigned Conveyance No. G75345. "Japanese Lease Assignment" means the Lease Assignment dated as of September 22, 1989 between GPA Offshore and the Owner Trustee. Trust Indenture 21 - 16 - "Japanese Lease Supplement" means the Lease Supplement No. 1 dated September 25, 1989 between the Japanese Lessor and GPA Offshore, covering the Aircraft, supplementing the Japanese Lease Agreement. "Japanese Lender" means Barclays Bank PLC, a public limited company organized under the laws of England and acting through its branch office in Tokyo, Japan, and its successors and permitted assigns under the Japanese Financing Documents. "Japanese Lessor" means FG Unity Leasing Co., Ltd., a Japanese limited purpose corporation wholly-owned by FUYO and acting as proprietor in a "Tokumei Kumiai" arrangement, and its successors and permitted assigns under the Japanese Financing Documents. "Japanese Loan Agreement" means the Loan Agreement dated as of September 22, 1989 between the Japanese Lessor and the Japanese Lender. "Japanese Security Agreement" means the Bank Security Agreement dated as of September 22, 1989 between the Japanese Lessor and the Japanese Lender. "JL Security Agreement" means the Lessor Security Agreement dated as of September 22, 1989 between the Japanese Lessor and GPA Offshore. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as amended and restated by the First Amended and Restated Lease, and as assigned and further amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-5] dated as of the date hereof and Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5] dated as of the date hereof and supplemented by Lease Supplement [GPA 1989 BN-5] No. 3 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. Trust Indenture 22 - 17 - "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Second Amended and Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of the Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of the Series C Equipment Notes and Series D Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities Trust Indenture 23 - 18 - market either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Manufacturer's Warranty Bill of Sale" means the full warranty (as to title) bill of sale covering the Aircraft (including all of the Buyer Furnished Equipment covered by the BFE Bill of Sale) executed by the Manufacturer's Subsidiary in favor of the Owner Trustee, dated the Delivery Date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Omnibus Agreement" means the Agreement to Purchase and Lease dated as of September 22, 1989 among the Parent Guarantor, GPA Offshore, the Japanese Lender and the Japanese Lessor. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may Trust Indenture 24 - 19 - be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease and the First Amended and Restated Lease. "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as supplemented by Trust Indenture Supplement No. 1 dated September 25, 1989 and as in effect immediately prior to the amendment and restatement thereof dated as of October 1, 1991, which were recorded as one instrument by the FAA on September 26, 1989 and assigned Conveyance No. G75346. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Aircraft Sublease Agreement [GPA 1989 BN-5] dated as of September 21, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means _________________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the four Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity Trust Indenture 25 - 20 - but solely as pass through trustee under each of the four separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Assignment" means the Purchase Agreement Assignment [GPA 1989 BN-5] dated the Delivery Date, between the Parent Guarantor and the Owner Trustee, together with the Consent and Agreements attached thereto. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1989 BN-5] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. Trust Indenture 26 - 21 - "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 3. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with Trust Indenture 27 - 22 - respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Supplemental Agreement" means the Supplemental Agreement dated as of September 22, 1989 between the Japanese Lessor and GPA Offshore. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Trust Indenture 28 - 23 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1989 BN-5] DATED AS OF SEPTEMBER 22, 1989, AS AMENDED. SERIES [A/B/C/D] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N624AW. No. ____ Date: [________, 1996] $------------------- DEBT RATE MATURITY DATE [____________] [_______,____] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1989 BN-5], dated as of September 22, 1989, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $________ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi- Trust Indenture 29 - 24 - annual installments commencing on January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including -----------, ----. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5], dated as of November 26, 1996, between the Owner Trustee and The Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 30 - 25 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 31 - 26 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as - -------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. Trust Indenture 32 - 27 - provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](4) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * - -------- (4) To be inserted in the case of a Series B, Series C or Series D Equipment Note. Trust Indenture 33 - 28 - IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. THE CHASE MANHATTAN BANK, as Indenture Trustee By:________________________________ Name: Title: Trust Indenture 34 - 29 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in four separate series consisting of Series A, Series B, Series C and Series D and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Equipment Trust Certificates issued under the First Amended and Restated Trust Indenture shall be concurrently redeemed. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 35 - 30 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 36 - 31 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes", "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of individuals who were at any time the proper officers of the Owner Trust Indenture 37 - 32 - Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Aircraft. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such other agreements to the contrary notwithstanding (except for any Trust Indenture 38 - 33 - express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Note Holder or the Indenture Trust Indenture 39 - 34 - Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such funds were received after 12:00 noon, New York City time, at the Trust Indenture 40 - 35 - place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding Taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States Taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trust Indenture 41 - 36 - Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income Tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding Tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding Taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: Trust Indenture 42 - 37 - First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Trust Indenture 43 - 38 - Upon surrender for registration of transfer of any Equipment Note, 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 Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and Trust Indenture 44 - 39 - its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, Trust Indenture 45 - 40 - exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Trust Indenture 46 - 41 - Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving Trust Indenture 47 - 42 - written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid Trust Indenture 48 - 43 - in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full and (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Sections 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be Trust Indenture 49 - 44 - required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; and (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Airframe or the Airframe and one or both Engines as the result of an Event of Loss thereto shall be applied to the redemption of Trust Indenture 50 - 45 - the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Airframe or a Replacement Airframe and one or more Replacement Engines are to be substituted for the Airframe or the Airframe and one or both Engines subject to such Event of Loss as provided in Section 11 of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections. (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Airframe or the Airframe and one or both Engines) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee Trust Indenture 51 - 46 - under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus 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, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note Holders, and if the aggregate amount remaining shall be insufficient to pay all such amounts in full, it shall be distributed Trust Indenture 52 - 47 - ratably, without priority of one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Trust Indenture 53 - 48 - Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in Trust Indenture 54 - 49 - accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and Trust Indenture 55 - 50 - second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 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 "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section. Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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 Trust Indenture 56 - 51 - Trustee reasonably believes such sale is necessary to make a distribution required by this Indenture. ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Trust Indenture 57 - 52 - Loss to the Indenture Trustee, the Lessee and the Owner Participant; (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease or any Japanese Financing Document, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; 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 the Japanese Lease Agreement, the Japanese Lease Assignment and the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or Trust Indenture 58 - 53 - (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or Trust Indenture 59 - 54 - (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure is not remedied within a period of 30 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 Trust Indenture 60 - 55 - 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Aircraft shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the expiry of the applicable grace period specified in the Lease with respect to such default) after notice of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the expiry of any applicable grace period specified in the Lease with respect to such default) after notice of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. 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 Basic Rent theretofore due and payable Trust Indenture 61 - 56 - and to remedy (but solely for purposes of this Indenture) any default by the Owner Trustee in the payment of any amount due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing or would result therefrom, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease as to (i) each of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic Rent Payment Dates, (y) the second sentence of this Section 4.03 shall cease to apply, and no payment by the Owner Participant in Trust Indenture 62 - 57 - respect of Supplemental Rent or performance of any obligation of the Lessee under the 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 12-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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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 the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Aircraft, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it Trust Indenture 63 - 58 - shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the Trust Indenture 64 - 59 - avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Trust Indenture 65 - 60 - Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. Except as otherwise provided in Section 2.12, no Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Sections 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Aircraft, etc. (a) If an Indenture Event of Default shall have occurred and be continuing, at the request of the Indenture Trustee the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such 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 designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue all or part of the Trust Indenture Estate wherever it may be Trust Indenture 66 - 61 - found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, 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 Trust Indenture 67 - 62 - other proper charges upon the Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of Trust Indenture 68 - 63 - written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. SECTION 4.09. Indenture Trustee May Prove Debt. If the Owner Trustee shall fail to pay any amount payable hereunder or under the Equipment Notes, the Indenture Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Owner Trustee or other obligor upon the Equipment Notes and collect in the manner provided by law out of the property of the Owner Trustee or other obligor upon the Equipment Notes, wherever situated the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Owner Trustee under the Bankruptcy Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Owner Trustee or its property, or in case of any other comparable judicial proceedings relative to the Owner Trustee upon the Equipment Notes, or to the property of the Owner Trustee, the Indenture Trustee, irrespective of whether the Principal Amount of the Equipment Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of Principal Amount and interest owing and unpaid in respect of the Equipment Notes, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation, expenses and disbursements to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Note Holders allowed in any judicial proceedings relative to the Owner Trustee or to the property of the Owner Trustee, Trust Indenture 69 - 64 - (b) unless prohibited by applicable law and regulations, to vote on behalf of the Note Holders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or Person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Note Holders and of the Indenture Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Note Holders (by such Note Holder's acceptance of an Equipment Note) to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to the Note Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation, expenses and disbursements to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith. Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Note Holder any plan of reorganization, arrangement, adjustment or composition affecting the Equipment Notes or the rights of any Holder thereof, or to authorize the Indenture Trustee to vote in respect of the claim of any Note Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. All rights of action and of asserting claims under this Indenture, or under any of the Equipment Notes, may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Equipment Notes or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Note Holders. In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall Trust Indenture 70 - 65 - be a party), the Indenture Trustee shall be held to represent all the Note Holders, and it shall not be necessary to make any Note Holders parties to any such proceedings. SECTION 4.10. Limitations on Suits by Note Holders. No Note Holder shall have any right to pursue a remedy under this Indenture or any Equipment Note, unless such Note Holder previously shall have given to the Indenture Trustee written notice of an Indenture Default and of the continuance thereof, as hereinbefore provided, and unless also a Majority in Interest of Note Holders shall have made a written request to the Indenture Trustee to pursue such remedy and shall have offered to the Indenture Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to pursue such remedy and no direction inconsistent with such written request shall have been given to the Indenture Trustee during such 60-day period pursuant to Section 5.02 hereof; it being understood and intended, and being expressly covenanted by each Note Holder and the Indenture Trustee, that no one or more Note Holders shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Note Holder or, except as otherwise provided herein (including, without limitation, Section 2.13), to obtain or seek to obtain priority over or preference to any other such Note Holder or to enforce any right under this Indenture, except in the manner herein provided. For the protection and enforcement of the provisions of this Section 4.10, each and every Note Holder and the Indenture Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 4.11. Unconditional Right of Note Holders to Receive Principal, Interest and Premium, and to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Equipment Note, the right of any Note Holder to receive payment of the Principal Amount of and interest on such Equipment Note on or after the respective due dates expressed in such Equipment Note, or, subject to Section 4.10, to institute suit in a manner consistent with the limitations contained in Section 4.04(a) hereof for the enforcement of any such payment on or after such respective dates as herein provided, shall not be impaired or affected without the consent of such Note Holder. SECTION 4.12. Exercise of Remedies by Foreign Note Holders. If the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time when (i) the Aircraft is registered with the Federal Aviation Administration, (ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes Trust Indenture 71 - 66 - is held by one or more Persons which are not a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV as a result of the occurrence of an Indenture Event of Default which is not a Lease Event of Default, the Indenture Trustee shall make arrangements, if any, as may be required by law so that such exercise of remedies shall not result in the ineligibility of the Aircraft to be registered under the Federal Aviation Act. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Aircraft or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by Trust Indenture 72 - 67 - applicable law, the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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 to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or Trust Indenture 73 - 68 - approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel; provided, however, that this provision will not interfere with the Owner Participant's right to consent to such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided Trust Indenture 74 - 69 - herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Aircraft or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts. (a) If at any time and from time to time, the Airframe or Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a), 11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s), as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine(s) 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Airframe and/or Engine(s) so to be released and the Replacement Airframe and/or Replacement Engine(s). Trust Indenture 75 - 70 - (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number; (ii) a description of the Replacement Airframe (including the manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number) to be received as consideration for the Airframe to be released; (iii) that on the date of the Indenture Supplement relating to the Replacement Airframe the Owner Trustee will hold legal title to (or, if the Japanese Lease Agreement is then in effect, be the beneficial owner of) such Replacement Airframe free and clear of all Liens except Permitted Liens, that such Replacement Airframe will on such date be in good operating condition, and that such Replacement Airframe has been or, substantially concurrently with such replacement, is in the process of being duly registered with the Owner Trustee as owner thereof under the Federal Aviation Act or under the law then applicable to the registration of the Aircraft and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and the Lessee or a Permitted Sublessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Section 12 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of a like Airbus A320-231 model airframe with equivalent or better modification status; (vi) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (vii) an appraisal prepared in accordance with the Appraisal Procedure (as defined in the Lease) confirms that Trust Indenture 76 - 71 - the Replacement Airframe has a value, utility and remaining useful life at least equal to that of the Airframe which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of the Lease whether or not they are in fact so maintained; and (viii) that each of the conditions specified in Section 11(a) and (c) of the Lease with respect to such Replacement Airframe have been satisfied. B. With respect to the replacement of any Engine: (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 hold title to (or, if the Japanese Lease Agreement is then in effect, beneficial ownership of) such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that such Replacement Engine is the same or an improved model as the Engine to be released; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be less than the then value, remaining useful life and utility of the Engine requested to be released, assuming such Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of 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; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to such Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to (of, if the Japanese Lease Agreement is then in effect, beneficial ownership of) the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released, (ii) Trust Indenture 77 - 72 - assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and to the Japanese Lease Agreement, if then in effect, and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) With respect to a Replacement Airframe, an appraisal from BK Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of independent aircraft appraisers satisfactory to the Indenture Trustee confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof. (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Airframe and/or Replacement Engine(s) have been validly subjected to the Lien of this Indenture and covered by the Lease and the Japanese Lease Agreement, if then in effect, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture, the Lease and, the Japanese Lease Agreement, if then in effect, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to (or, if the Japanese Lease Agreement is then in effect, the beneficial ownership of) the Owner Trustee to such Replacement Airframe and/or Replacement Engine and the Lien of this Indenture on such Replacement Airframe and/or Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) Trust Indenture 78 - 73 - shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Airframe and, if an Event of Loss with respect to the Aircraft has occurred, the Replacement Engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Airframe and/or Engine(s) being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Airframe or Engine(s) being replaced shall be applicable to such Replacement Airframe or Replacement Engine(s) with the same force and effect as if such Replacement Airframe or Replacement Engine(s) were the same airframe or engine(s), as the case may be, as the Airframe or Engine(s) being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Trust Indenture 79 - 74 - Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Aircraft; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; Trust Indenture 80 - 75 - (b) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any amendments, modifications, waivers or consents in respect of any of the provisions of Sections 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee 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 pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trust Indenture 81 - 76 - Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Trust Indenture 82 - 77 - Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee shall be answerable or accountable under any circumstances, except for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. SECTION 6.02. Absence of Duties. In the case of the Indenture Trustee, except in accordance with written instructions Trust Indenture 83 - 78 - furnished pursuant to Section 5.01, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the 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 on the Aircraft, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Aircraft. SECTION 6.03. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE 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 ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Aircraft the Owner Trustee shall have received whatever interest in the Aircraft was conveyed to it under the Japanese Lease Agreement and the Japanese Lease Assignment subject to the rights of the parties to the Indenture Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. Trust Indenture 84 - 79 - SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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, except that any such execution or performance shall not derogate from Trust Indenture 85 - 80 - the Indenture Trustee's obligations under the third sentence of Section 2.04(a), the Indenture Trustee and the Owner Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 Trust Indenture 86 - 81 - 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 from and after the Restatement Date (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 Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants, thereunder; provided that so long as the Trust Indenture 87 - 82 - Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. Trust Indenture 88 - 83 - SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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 and assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. Trust Indenture 89 - 84 - (c) Any successor Indenture Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and shall also be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or Trust Indenture 90 - 85 - separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and Trust Indenture 91 - 86 - (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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate 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. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or supplement to the Lease or any of the Japanese Financing Documents, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease or any of the Japanese Financing Documents, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such Trust Indenture 92 - 87 - amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any material respect, and (iii) the Lessee may effect the re-registration of the Aircraft in accordance with but always subject to the terms and conditions applicable thereto specified in Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, any of the Japanese Financing Documents or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such Trust Indenture 93 - 88 - amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as Trust Indenture 94 - 89 - the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee, no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and Trust Indenture 95 - 90 - delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Aircraft, any Engines or other property thereto or to release the Aircraft, any Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof or to execute and deliver any supplement or certificate necessary with respect to the foregoing under the Japanese Lease Agreement. Trust Indenture 96 - 91 - SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Aircraft and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and 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 as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. Trust Indenture 97 - 92 - SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Aircraft. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of the Aircraft, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 450 West 33rd Street, 15th Floor, New York, New York 10001, Attention: Corporate Trust Department (telecopy: (212) 946-8160) or (iii) if to the Owner Participant, the Lessee or any Note 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 Trust Indenture 98 - 93 - signature pages to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Trust Indenture 99 - 94 - Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14. JL Security Agreement. The Owner Trustee hereby confirms and agrees that its security interest in and to the Aircraft granted under the JL Security Agreement is and shall be subject and subordinate in all respects to the Lien of this Indenture, and in the event the Indenture Trustee shall foreclose the Lien of this Indenture and sell or otherwise transfer the Aircraft, such sale or other transfer shall be free and clear of such security interest. Trust Indenture 100 - 95 - IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: _________________________________ Name: Title: THE CHASE MANHATTAN BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By: _________________________________ Name: Title: Trust Indenture 101 EXHIBIT A TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-5] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1989 BN-5] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1989 BN-5] dated as of September 22, 1989 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as amended and restated as of October 1, 1991 and as further amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and The Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover 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 any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated September 22, 1989 subjected to the Lien of such Indenture the airframe and engines therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on September 26, 1989 and assigned Conveyance No. G75346. WHEREAS, the Amended and Restated Indenture (which amended and restated the Original Indenture), as supplemented by Trust Indenture Supplement No. 2 dated October 24, 1991 subjected to the Lien of such Indenture the airframe and engines therein described, which Amended and Restated Indenture and Trust Indenture Supplement No. 2 have been duly recorded with the Federal Aviation Administration as one document on November 12, 1991 and assigned Conveyance No. Z91420. 102 - 2 - WHEREAS(1), the Indenture relates to the 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [3] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. ---- ---------------- ---------------- NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner Trustee has granted, bargained, sold, - ---------- 1 This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). 2 This recital not to be included in the first Indenture Supplement. 3 Insert appropriate number. Form of Trust Indenture Supplement 103 - 3 - assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRFRAME(S) ( ) airframe(s) identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ------ ------------- together with all 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 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. Form of Trust Indenture Supplement 104 - 4 - As further security for the obligations referred to above and secured by the Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1989 BN-5] No. 3 of even date herewith (other than Excepted Payments) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 105 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By_________________________ Title: Form of Trust Indenture Supplement 106 SCHEDULE I TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-5]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE Series A $ 11,936,661 02-Jul-2005 6.85% Series B $ 4,476,247 02-Jan-2002 6.93% Series C $ 4,476,247 02-Jan-2002 6.86% Series D $ 2,288,832 02-Jan-98 8.16%
107 EQUIPMENT NOTES AMORTIZATION SERIES A Aircraft: N624AW Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 108 SERIES B Aircraft: N624AW Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 109 SERIES C Aircraft: N624AW Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 110 SERIES D Aircraft: N624AW Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 111 SCHEDULE II TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-5] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. Schedule II-1 EX-4.34 35 RESTATED TRUST INDENTURE [GPA 1989 BN-6] 1 EXHIBIT 4.34 - -------------------------------------------------------------------------------- SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-6] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and THE CHASE MANHATTAN BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 65 Registration No. N626AW Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
Page ---- GRANTING CLAUSE.............................................................. 3 HABENDUM CLAUSE.............................................................. 7 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions........................................... 9 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes....................................... 22 SECTION 2.02. Issuance and Terms of Equipment Notes......................... 28 SECTION 2.03. Payments from Trust Indenture Estate Only....................................................... 31 SECTION 2.04. Method of Payment............................................. 32 SECTION 2.05. Application of Payments....................................... 35 SECTION 2.06. Termination of Interest in Trust Indenture Estate........................................... 36 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes............................................ 36 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes............................................ 37 SECTION 2.09. Payment of Expenses on Transfer; Cancellation............................................... 38 SECTION 2.10. Mandatory Redemptions of Equipment Notes...................................................... 38 SECTION 2.11. Redemptions; Notice of Redemption............................. 39 SECTION 2.12. Option to Purchase Equipment Notes............................ 40 SECTION 2.13. Subordination................................................. 41 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions.................................... 42 SECTION 3.02. Event of Loss and Replacement................................. 43 SECTION 3.03. Payment After Indenture Event of Default, etc............................................... 44 SECTION 3.04. Certain Payments.............................................. 47 SECTION 3.05. Other Payments................................................ 48 SECTION 3.06. Payments to Owner Trustee..................................... 48 SECTION 3.07. Investment of Amounts Held by Indenture Trustee........................................ 49
Trust Indenture 3 - ii -
Page ---- ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee.................................................. 49 SECTION 4.02. Indenture Events of Default................................... 51 SECTION 4.03. Certain Rights................................................ 54 SECTION 4.04. Remedies...................................................... 55 SECTION 4.05. Return of the Aircraft, etc................................... 59 SECTION 4.06. Remedies Cumulative........................................... 60 SECTION 4.07. Discontinuance of Proceedings................................. 60 SECTION 4.08. Waiver of Past Indenture Defaults............................. 61 SECTION 4.09. Indenture Trustee May Prove Debt.............................. 61 SECTION 4.10. Limitations on Suits by Note Holders.......................... 63 SECTION 4.11. Unconditional Right of Note Holders to Receive Principal, Interest and Premium, and to Institute Certain Suits.................................................... 64 SECTION 4.12. Exercise of Remedies by Foreign Note Holders.................................................. 64 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default.......................... 64 SECTION 5.02. Action Upon Instructions...................................... 65 SECTION 5.03. Indemnification............................................... 66 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions................................ 66 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions..................... 67 SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts............................ 67 SECTION 5.07. Indenture Supplements for Replacements........................ 71 SECTION 5.08. Effect of Replacement......................................... 71 SECTION 5.09. Notices, etc.................................................. 71 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant........................................ 72 SECTION 5.11. Evidence of Action Taken by Note Holder....................... 74 SECTION 5.12. Right of Revocation of Action Taken........................... 74 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties............................... 75 SECTION 6.02. Absence of Duties............................................. 75
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Page ---- SECTION 6.03. No Representations or Warranties as to Aircraft or Documents.................................... 76 SECTION 6.04. No Segregation of Moneys; No Interest........................ 77 SECTION 6.05. Reliance; Agents; Advice of Counsel.......................... 77 SECTION 6.06. Capacity in Which Acting..................................... 78 SECTION 6.07. Compensation................................................. 78 SECTION 6.08. May Become Note Holder....................................... 78 SECTION 6.09. Further Assurances; Financing Statements............................................... 78 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification..................................... 79 SECTION 7.02. Exculpation and Release of Liability......................... 80 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee............................ 80 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor........................ 80 SECTION 8.03. Appointment of Separate Trustees............................. 82 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures............................................... 84 SECTION 9.02. Effect of Supplemental Indenture............................. 87 SECTION 9.03. Documents to Be Given to Trustee............................. 87 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures.................................. 87 SECTION 9.05. Trustees Protected........................................... 87 SECTION 9.06. Documents Mailed to Note Holders............................. 88 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement....................... 88 SECTION 9.08. Notices to Liquidity Provider................................ 88 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture.................................... 88 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders................................... 89
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Page ---- SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding............................................... 89 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders.................................. 89 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease.......................................... 90 SECTION 10.06. Notices..................................................... 90 SECTION 10.07. Severability................................................ 90 SECTION 10.08. No Oral Modifications or Continuing Waivers.................................................. 90 SECTION 10.09. Successors and Assigns...................................... 91 SECTION 10.10. Headings.................................................... 91 SECTION 10.11. Normal Commercial Relations................................. 91 SECTION 10.12. Governing Law; Counterpart Form............................. 91 SECTION 10.13. Section 1110................................................ 91 SECTION 10.14. JL Security Agreement....................................... 92 EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements
Trust Indenture 6 SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-6] SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-6] (this "Second Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-6] No. 1 dated December 22, 1989, as further supplemented by Trust Agreement Supplement [GPA 1989 BN-6] No. 2 dated October 24, 1991, and as further supplemented by Trust Agreement Supplement [GPA 1989 BN-6] No. 3 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as supplemented by Trust Indenture Supplement No. 1 dated December 22, 1989, which were recorded by the Federal Aviation Administration on April 2, 1990 as one instrument and assigned Conveyance No. V79847 (as so supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Trust Indenture 7 - 2 - Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as supplemented by Lease Supplement [GPA 1989 BN-6] No. 1 dated December 22, 1989, which were recorded by the Federal Aviation Administration on April 2, 1990 as one instrument and assigned Conveyance No. V79848 (as so supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Original Loan Participants (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into an Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of October 1, 1991, as supplemented by the Trust Indenture Supplement No. 2 [GPA 1989 BN-6], dated October 24, 1991, which were recorded by the Federal Aviation Administration on November 12, 1991 as one document and assigned Conveyance No. Z91423 (as amended, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into an Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] dated as of October 1, 1991, which amended and restated the Original Lease, as supplemented by Lease Supplement [GPA 1989 BN-6] No. 2 dated October 24, 1991, which were recorded by the Federal Aviation Administration on November 12, 1991 as one document and assigned Conveyance No. Z91424 (as amended, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Lease") and (iii) pursuant to the First Amended and Restated Indenture, the Owner Trustee issued and sold to the Certificate Holders (as defined in the First Amended and Restated Indenture) Equipment Trust Certificates, Series BN-6 in exchange for the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the First Amended and Restated Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-6] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Second Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Equipment Trust Certificates issued to the Certificate Holders pursuant to the First Amended and Restated Indenture shall be redeemed and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); Trust Indenture 8 - 3 - WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Second Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the First Amended and Restated Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Second Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make- Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and of Trust Indenture 9 - 4 - 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments (which collectively, excluding Excepted Payments but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under any of the Lease, the Japanese Lease Agreement, the First Japanese Lease Assignment or the Second Japanese Lease Assignment, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement (to the extent assigned to or for the benefit of the Owner Trustee); the Purchase Agreement Warranties Assignment; the Second Aircraft Warranty Bill of Sale; the Japanese Lease Agreement, the Japanese Lease Supplement, the Supplemental Agreement, the Japanese Lessor's Consent, the Assumption Agreement, the Confirmation Agreement, the FUYO Guaranty, the JL Security Agreement and the Omnibus Agreement (each to the extent assigned by the First Japanese Lease Assignment and the Second Japanese Lease Assignment); the First Japanese Lease Assignment; the Second Japanese Lease Assignment; all documents and property and interest therein assigned by the First Japanese Lease Assignment and the Second Japanese Lease Assignment to the extent not otherwise covered; the BFE Bill of Sale; each notice, letter agreement or other document related to any of the foregoing Trust Indenture 10 - 5 - entered into by or for the benefit of the Owner Trustee (or assigned to the Owner Trustee); in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Aircraft or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default or any "Event of Default" under and as defined in the Japanese Lease Agreement, and (y) any right to restitution from the Lessee, the Manufacturer or any other Person in respect of any determination of invalidity of any such document, it being agreed that the rights, powers and remedies referred to in the preceding clauses (x) and (y) are presently assigned and transferred to the Indenture Trustee and may, except as provided in Section 5.10 or elsewhere in this Indenture, be exercised by the Indenture Trustee without the necessity of proceeding under Section 4.04 to exercise remedies hereunder; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval under or with respect of any thereof or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or otherwise, arising out of any default under any Assigned Sublease, it being agreed that the rights, powers and remedies referred to above in this paragraph (3) are presently assigned and transferred to the Indenture Trustee and may, except as provided in Section 5.10 or elsewhere in this Indenture, be exercised by the Indenture Trustee without the necessity of proceeding under Section 4.04 to exercise remedies hereunder; Trust Indenture 11 - 6 - (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Owner Trustee in and to the same and every part thereof; (5) all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease and/or the Japanese Lease Agreement), and all insurance proceeds with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement, and execution copies of the Purchase Agreement Warranties Assignment, the Japanese Lease Agreement, the Japanese Lease Supplement, the First Japanese Lease Assignment, the Second Japanese Lease Assignment, the Japanese Lessor's Consent, the Assumption Agreement, the Confirmation Agreement, the FUYO Guaranty, the Supplemental Agreement, and the JL Security Agreement. The Owner Trustee thereafter delivered to the Indenture Trustee the original BFE Bill of Sale. Concurrently with the delivery of the First Amended and Restated Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the First Amended and Restated Lease and Lease Supplement No. 2. Concurrently with the delivery of this Second Amended and Restated Indenture, the Owner Trust Indenture 12 - 7 - Trustee is delivering to the Indenture Trustee the chattel paper original executed counterparts of the Second Amended and Restated Lease and Lease Supplement No. 3. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the 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 and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Trust Indenture 13 - 8 - 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 the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments, (i) accept any payment from the Lessee, any Permitted Sublessee, FUYO or the Japanese Lessor under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Trust Indenture 14 - 9 - Indenture Documents, or execute any waiver or modification of, or consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. Trust Indenture 15 - 10 - "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Assumption Agreement" means, collectively, the two Assumption Agreements dated as of September 28, 1989 between GPA Offshore and the Grand Cayman branch of the Japanese Lender. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended. "BFE Bill of Sale" means the full warranty (as to title) bill of sale covering the Buyer Furnished Equipment, transferring all right, title and interest therein to the Owner Trustee. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. Trust Indenture 16 - 11 - "Confirmation Agreement" means, collectively, Confirmation No. 1 and Confirmation No. 2. "Confirmation No. 1" has the meaning set forth in Appendix X to the Japanese Lease Agreement. "Confirmation No. 2" has the meaning set forth in Appendix X to the Japanese Lease Agreement. "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 450 West 33rd Street, New York, New York 10001, Attention: Corporate Trust Department, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C and Series D, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means December 22, 1989. "Deposit Agreement" means the Deposit Agreement dated as of September 28, 1989 between Barclays Bank PLC, a public limited company organized under the laws of England and acting through its branch office in Grand Cayman and the Designated Financial Institution (as described in Section 3 of Confirmation No. 2). "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the Trust Indenture 17 - 12 - United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to Section 13 of the Lease and not in support of any payment obligation of the Owner Trustee under any Indenture Document, (ii) any proceeds of public liability insurance in respect of the Aircraft payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Aircraft by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee, or any of their respective successors, permitted assigns, directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Guarantor under the Tax Indemnification Agreement, as the Trust Indenture 18 - 13 - case may be, and not in support of any payment obligation of the Owner Trustee under any Indenture Document, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Lease, and (vii) subject to the last sentence of Section 5.10 hereof, any right to enforce the payment of any amount described in clauses (i) through (vi) above and the proceeds thereof. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "First Japanese Lease Assignment" means the Lease Assignment [GPA 1989 BN-6] dated as of September 28, 1989 between GPA Offshore and the Original Head Lessee. "FUYO" means FUYO General Lease Co., Ltd., a corporation organized under the laws of Japan, and its successors and assigns under the Japanese Financing Documents. "FUYO Guaranty" means the Guaranty Agreement dated as of September 28, 1989 from FUYO for the benefit of the "Lessee" (under and as defined in the Japanese Lease Agreement) and such "Lessee's" successors and permitted assigns. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "GPA Offshore" means Air Tara Caymans II, Limited, a Cayman Islands corporation wholly-owned by the Parent Trust Indenture 19 - 14 - Guarantor, and its successors and permitted assigns under the Japanese Financing Documents. "Indenture," "this Indenture," and "the Indenture" mean this Second Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement, (to the extent assigned to or for the benefit of the Owner Trustee); the Purchase Agreement Warranties Assignment; the BFE Bill of Sale; the Japanese Lease Agreement; the Japanese Lease Supplement; the Supplemental Agreement; the Japanese Lessor's Consent; the FUYO Guaranty; the Assumption Agreement; the Confirmation Agreement; the JL Security Agreement; the Omnibus Agreement and the other Japanese Financing Documents (each to the extent assigned by the First Japanese Lease Assignment and the Second Japanese Lease Assignment); the First Japanese Lease Assignment; and the Second Japanese Lease Assignment. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Aircraft and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated December 22, 1989, which was recorded as one instrument by the FAA with the Original Indenture, Trust Indenture Supplement No. 2 dated October 24, 1991, which was recorded as one instrument by the FAA with the First Amended and Trust Indenture 20 - 15 - Restated Indenture, and Trust Indenture Supplement No. 3 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this Second Amended and Restated Indenture. "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Japanese Financing Documents" means, collectively, the Omnibus Agreement, the Japanese Loan Agreement, the Japanese Security Agreement, the Japanese Lease Agreement, the Japanese Lease Supplement, the Supplemental Agreement, the Japanese Lessor's Consent, the Deposit Agreement, the FUYO Guaranty, the Assumption Agreement, the Confirmation Agreement, the JL Security Agreement, the First Japanese Lease Assignment, the Second Japanese Lease Assignment and any other documents or agreements referred to in the Second Japanese Lease Assignment. "Japanese Lease Agreement" means the Lease Agreement dated as of September 28, 1989 between the Japanese Lessor, as lessor, and GPA Offshore, as lessee, which with the Japanese Lease Supplement, the Supplemental Agreement and the First Japanese Lease Assignment attached was recorded as one instrument by the FAA on September 29, 1989 and assigned Conveyance No. G75383. "Japanese Lease Supplement" means the Lease Supplement No. 1 dated September 29, 1989 between the Japanese Lessor and GPA Offshore, covering the Aircraft, supplementing the Japanese Lease Agreement. "Japanese Lender" means Barclays Bank PLC, a public limited company organized under the laws of England and acting through its branch office in Tokyo, Japan, and its successors and permitted assigns under the Japanese Financing Documents. Trust Indenture 21 - 16 - "Japanese Lessor" means FG Vision Leasing Co., Ltd., a Japanese limited purpose corporation wholly-owned by FUYO and acting as proprietor in a "Tokumei Kumiai" arrangement, and its successors and permitted assigns under the Japanese Financing Documents. "Japanese Lessor's Consent" means the Consent of the Japanese Lessor, dated as of the Delivery Date, with respect to certain matters contained in the Japanese Lease Agreement. "Japanese Loan Agreement" means the Loan Agreement dated as of September 28, 1989 between the Japanese Lessor and the Japanese Lender. "Japanese Security Agreement" means the Bank Security Agreement dated as of September 28, 1989 between the Japanese Lessor and the Japanese Lender. "JL Security Agreement" means the Lessor Security Agreement dated as of September 28, 1989 between the Japanese Lessor and GPA Offshore. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as amended and restated by the First Amended and Restated Lease, and as assigned and further amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-6] dated as of the date hereof and Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] dated as of the date hereof and supplemented by Lease Supplement [GPA 1989 BN-6] No. 3 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Second Amended and Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. Trust Indenture 22 - 17 - "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of the Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of the Series C Equipment Notes and Series D Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as Trust Indenture 23 - 18 - possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Omnibus Agreement" means the Agreement to Purchase and Lease dated as of September 28, 1989 among the Parent Guarantor, GPA Offshore, the Japanese Lender and the Japanese Lessor. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease and the First Amended and Restated Lease. Trust Indenture 24 - 19 - "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as supplemented by Trust Indenture Supplement No. 1 dated December 22, 1989 and as in effect immediately prior to the amendment and restatement thereof dated as of October 1, 1991, which were recorded as one instrument by the FAA on April 2, 1990 and assigned Conveyance No. V79847. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Aircraft Sublease Agreement [GPA 1989 BN-6] dated as of September 21, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means ________________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the four Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the four separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. Trust Indenture 25 - 20 - "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1989 BN-6] dated the Delivery Date, between the Original Head Lessee and the Owner Trustee. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1989 BN-6] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Trust Indenture 26 - 21 - Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 3. "Second Japanese Lease Assignment" means the Lease Assignment No. 2 dated as of December 15, 1989 between the Original Head Lessee and the Owner Trustee, which was recorded by the FAA on April 2, 1990 and assigned Conveyance No. V79846. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Supplemental Agreement" means the Supplemental Agreement dated as of September 28, 1989 between the Japanese Lessor and GPA Offshore. Trust Indenture 27 - 22 - "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Trust Indenture 28 - 23 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1989 BN-6] DATED AS OF DECEMBER 15, 1989, AS AMENDED. SERIES [A/B/C/D] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N626AW. No. ____ Date: [________, 1996] $________________ DEBT RATE MATURITY DATE [________] [_______, ____] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1989 BN-6], dated as of December 15, 1989, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $________ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi- Trust Indenture 29 - 24 - annual installments commencing on January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including ______________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6], dated as of November 26, 1996, between the Owner Trustee and The Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 30 - 25 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 31 - 26 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as - -------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. Trust Indenture 32 - 27 - provided in the Indenture and (c) appoints the Indenture Trustee his attorney- in-fact for such purpose.](4) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * - -------- (4) To be inserted in the case of a Series B, Series C or Series D Equipment Note. Trust Indenture 33 - 28 - IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. THE CHASE MANHATTAN BANK, as Indenture Trustee By________________________________ Name: Title: Trust Indenture 34 - 29 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid ---------------- ---------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in four separate series consisting of Series A, Series B, Series C and Series D and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Equipment Trust Certificates issued under the First Amended and Restated Trust Indenture shall be concurrently redeemed. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 35 - 30 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 36 - 31 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes", "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of individuals who were at any time the proper officers of the Owner Trust Indenture 37 - 32 - Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Aircraft. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such other agreements to the contrary notwithstanding (except for any Trust Indenture 38 - 33 - express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Note Holder or the Indenture Trust Indenture 39 - 34 - Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such funds were received after 12:00 noon, New York City time, at the Trust Indenture 40 - 35 - place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding Taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States Taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trust Indenture 41 - 36 - Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income Tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding Tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding Taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: Trust Indenture 42 - 37 - First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Trust Indenture 43 - 38 - Upon surrender for registration of transfer of any Equipment Note, 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 Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and Trust Indenture 44 - 39 - its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, Trust Indenture 45 - 40 - exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Trust Indenture 46 - 41 - Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving Trust Indenture 47 - 42 - written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid Trust Indenture 48 - 43 - in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full and (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Sections 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be Trust Indenture 49 - 44 - required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; and (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Airframe or the Airframe and one or both Engines as the result of an Event of Loss thereto shall be applied to the redemption of Trust Indenture 50 - 45 - the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Airframe or a Replacement Airframe and one or more Replacement Engines are to be substituted for the Airframe or the Airframe and one or both Engines subject to such Event of Loss as provided in Section 11 of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections. (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Airframe or the Airframe and one or both Engines) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee Trust Indenture 51 - 46 - under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus 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, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note Holders, and if the aggregate amount remaining shall be insufficient to pay all such amounts in full, it shall be distributed Trust Indenture 52 - 47 - ratably, without priority of one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Trust Indenture 53 - 48 - Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in Trust Indenture 54 - 49 - accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and Trust Indenture 55 - 50 - second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 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 "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section ; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section . Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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 Trust Indenture 56 - 51 - Trustee reasonably believes such sale is necessary to make a distribution required by this Indenture. ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Trust Indenture 57 - 52 - Loss to the Indenture Trustee, the Lessee and the Owner Participant; (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease or any Japanese Financing Document, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; 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 the Japanese Lease Agreement, the Second Japanese Lease Assignment and the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or Trust Indenture 58 - 53 - (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or Trust Indenture 59 - 54 - (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure is not remedied within a period of 30 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 Trust Indenture 60 - 55 - 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Aircraft shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the expiry of the applicable grace period specified in the Lease with respect to such default) after notice of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the expiry of any applicable grace period specified in the Lease with respect to such default) after notice of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. 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 Basic Rent theretofore due and payable Trust Indenture 61 - 56 - and to remedy (but solely for purposes of this Indenture) any default by the Owner Trustee in the payment of any amount due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing or would result therefrom, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease as to (i) each of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic Rent Payment Dates, (y) the second sentence of this Section 4.03 shall cease to apply, and no payment by the Owner Participant in Trust Indenture 62 - 57 - respect of Supplemental Rent or performance of any obligation of the Lessee under the 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 12-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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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 the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Aircraft, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it Trust Indenture 63 - 58 - shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the Trust Indenture 64 - 59 - avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Trust Indenture 65 - 60 - Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. Except as otherwise provided in Section 2.12, no Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Sections 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Aircraft, etc. (a) If an Indenture Event of Default shall have occurred and be continuing, at the request of the Indenture Trustee the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such 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 designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue all or part of the Trust Indenture Estate wherever it may be Trust Indenture 66 - 61 - found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, 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 Trust Indenture 67 - 62 - other proper charges upon the Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of Trust Indenture 68 - 63 - written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. SECTION 4.09. Indenture Trustee May Prove Debt. If the Owner Trustee shall fail to pay any amount payable hereunder or under the Equipment Notes, the Indenture Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Owner Trustee or other obligor upon the Equipment Notes and collect in the manner provided by law out of the property of the Owner Trustee or other obligor upon the Equipment Notes, wherever situated the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Owner Trustee under the Bankruptcy Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Owner Trustee or its property, or in case of any other comparable judicial proceedings relative to the Owner Trustee upon the Equipment Notes, or to the property of the Owner Trustee, the Indenture Trustee, irrespective of whether the Principal Amount of the Equipment Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section , shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of Principal Amount and interest owing and unpaid in respect of the Equipment Notes, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation, expenses and disbursements to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Note Holders allowed in any judicial proceedings relative to the Owner Trustee or to the property of the Owner Trustee, Trust Indenture 69 - 64 - (b) unless prohibited by applicable law and regulations, to vote on behalf of the Note Holders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or Person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Note Holders and of the Indenture Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Note Holders (by such Note Holder's acceptance of an Equipment Note) to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to the Note Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation, expenses and disbursements to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith. Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Note Holder any plan of reorganization, arrangement, adjustment or composition affecting the Equipment Notes or the rights of any Holder thereof, or to authorize the Indenture Trustee to vote in respect of the claim of any Note Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. All rights of action and of asserting claims under this Indenture, or under any of the Equipment Notes, may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Equipment Notes or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Note Holders. In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall Trust Indenture 70 - 65 - be a party), the Indenture Trustee shall be held to represent all the Note Holders, and it shall not be necessary to make any Note Holders parties to any such proceedings. SECTION 4.10. Limitations on Suits by Note Holders. No Note Holder shall have any right to pursue a remedy under this Indenture or any Equipment Note, unless such Note Holder previously shall have given to the Indenture Trustee written notice of an Indenture Default and of the continuance thereof, as hereinbefore provided, and unless also a Majority in Interest of Note Holders shall have made a written request to the Indenture Trustee to pursue such remedy and shall have offered to the Indenture Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to pursue such remedy and no direction inconsistent with such written request shall have been given to the Indenture Trustee during such 60-day period pursuant to Section 5.02 hereof; it being understood and intended, and being expressly covenanted by each Note Holder and the Indenture Trustee, that no one or more Note Holders shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Note Holder or, except as otherwise provided herein (including, without limitation, Section 2.13), to obtain or seek to obtain priority over or preference to any other such Note Holder or to enforce any right under this Indenture, except in the manner herein provided. For the protection and enforcement of the provisions of this Section 4.10, each and every Note Holder and the Indenture Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 4.11. Unconditional Right of Note Holders to Receive Principal, Interest and Premium, and to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Equipment Note, the right of any Note Holder to receive payment of the Principal Amount of and interest on such Equipment Note on or after the respective due dates expressed in such Equipment Note, or, subject to Section 4.10, to institute suit in a manner consistent with the limitations contained in Section 4.04(a) hereof for the enforcement of any such payment on or after such respective dates as herein provided, shall not be impaired or affected without the consent of such Note Holder. SECTION 4.12. Exercise of Remedies by Foreign Note Holders. If the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time when (i) the Aircraft is registered with the Federal Aviation Administration, (ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes Trust Indenture 71 - 66 - is held by one or more Persons which are not a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV as a result of the occurrence of an Indenture Event of Default which is not a Lease Event of Default, the Indenture Trustee shall make arrangements, if any, as may be required by law so that such exercise of remedies shall not result in the ineligibility of the Aircraft to be registered under the Federal Aviation Act. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Aircraft or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by Trust Indenture 72 - 67 - applicable law, the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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 to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or Trust Indenture 73 - 68 - approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel; provided, however, that this provision will not interfere with the Owner Participant's right to consent to such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided Trust Indenture 74 - 69 - herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Aircraft or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts. (a) If at any time and from time to time, the Airframe or Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a), 11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s), as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine(s) 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Airframe and/or Engine(s) so to be released and the Replacement Airframe and/or Replacement Engine(s). Trust Indenture 75 - 70 - (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number; (ii) a description of the Replacement Airframe (including the manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number) to be received as consideration for the Airframe to be released; (iii) that on the date of the Indenture Supplement relating to the Replacement Airframe the Owner Trustee will hold legal title to (or, if the Japanese Lease Agreement is then in effect, be the beneficial owner of) such Replacement Airframe free and clear of all Liens except Permitted Liens, that such Replacement Airframe will on such date be in good operating condition, and that such Replacement Airframe has been or, substantially concurrently with such replacement, is in the process of being duly registered with the Owner Trustee as owner thereof under the Federal Aviation Act or under the law then applicable to the registration of the Aircraft and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and the Lessee or a Permitted Sublessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Section 12 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of a like Airbus A320-231 model airframe with equivalent or better modification status; (vi) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (vii) an appraisal prepared in accordance with the Appraisal Procedure (as defined in the Lease) confirms that Trust Indenture 76 - 71 - the Replacement Airframe has a value, utility and remaining useful life at least equal to that of the Airframe which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of the Lease whether or not they are in fact so maintained; and (viii) that each of the conditions specified in Section 11(a) and (c) of the Lease with respect to such Replacement Airframe have been satisfied. B. With respect to the replacement of any Engine: (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 hold title to (or, if the Japanese Lease Agreement is then in effect, beneficial ownership of) such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that such Replacement Engine is the same or an improved model as the Engine to be released; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be less than the then value, remaining useful life and utility of the Engine requested to be released, assuming such Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of 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; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to such Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to (of, if the Japanese Lease Agreement is then in effect, beneficial ownership of) the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released, (ii) Trust Indenture 77 - 72 - assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and to the Japanese Lease Agreement, if then in effect, and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) With respect to a Replacement Airframe, an appraisal from BK Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of independent aircraft appraisers satisfactory to the Indenture Trustee confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof. (5) The opinion of counsel to the Lessee satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Airframe and/or Replacement Engine(s) have been validly subjected to the Lien of this Indenture and covered by the Lease and the Japanese Lease Agreement, if then in effect, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture, the Lease and, the Japanese Lease Agreement, if then in effect, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to (or, if the Japanese Lease Agreement is then in effect, the beneficial ownership of) the Owner Trustee to such Replacement Airframe and/or Replacement Engine and the Lien of this Indenture on such Replacement Airframe and/or Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) Trust Indenture 78 - 73 - shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Airframe and, if an Event of Loss with respect to the Aircraft has occurred, the Replacement Engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Airframe and/or Engine(s) being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Airframe or Engine(s) being replaced shall be applicable to such Replacement Airframe or Replacement Engine(s) with the same force and effect as if such Replacement Airframe or Replacement Engine(s) were the same airframe or engine(s), as the case may be, as the Airframe or Engine(s) being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Trust Indenture 79 - 74 - Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Aircraft; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; Trust Indenture 80 - 75 - (b) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any amendments, modifications, waivers or consents in respect of any of the provisions of Sections 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee 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 pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trust Indenture 81 - 76 - Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Trust Indenture 82 - 77 - Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee shall be answerable or accountable under any circumstances, except for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. SECTION 6.02. Absence of Duties. In the case of the Indenture Trustee, except in accordance with written instructions Trust Indenture 83 - 78 - furnished pursuant to Section 5.01, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the 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 on the Aircraft, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Aircraft. SECTION 6.03. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE 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 ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Aircraft the Owner Trustee shall have received whatever interest in the Aircraft was conveyed to it under the Japanese Lease Agreement and the Second Japanese Lease Assignment subject to the rights of the parties to the Indenture Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trust Indenture 84 - 79 - Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 Trust Indenture 85 - 80 - the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and, except that any such execution or performance shall not derogate from the Indenture Trustee's obligations under the third sentence of Section 2.04(a), the Indenture Trustee and the Owner Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 Trust Indenture 86 - 81 - 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 from and after the Restatement Date (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 Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's Trust Indenture 87 - 82 - indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants, thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, Trust Indenture 88 - 83 - the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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 and assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 Trust Indenture 89 - 84 - Indenture Trustee all moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and shall also be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust Indenture Estate or any part thereof, and with such rights and duties, as shall be specified Trust Indenture 90 - 85 - 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised Trust Indenture 91 - 86 - hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate 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. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or supplement to the Lease or any of the Japanese Financing Documents, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease or any of the Japanese Financing Documents, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into Trust Indenture 92 - 87 - amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any material respect, and (iii) the Lessee may effect the re-registration of the Aircraft in accordance with but always subject to the terms and conditions applicable thereto specified in Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, any of the Japanese Financing Documents or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Trust Indenture 93 - 88 - Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with Trust Indenture 94 - 89 - the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee, no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture Trust Indenture 95 - 90 - referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Aircraft, any Trust Indenture 96 - 91 - Engines or other property thereto or to release the Aircraft, any Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof or to execute and deliver any supplement or certificate necessary with respect to the foregoing under the Japanese Lease Agreement. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Aircraft and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and 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 as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other Trust Indenture 97 - 92 - right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Aircraft. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of the Aircraft, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 450 West 33rd Street, 15th Floor, New York, New York 10001, Trust Indenture 98 - 93 - Attention: Corporate Trust Department (telecopy: (212) 946-8160) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. Trust Indenture 99 - 94 - 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14. JL Security Agreement. The Owner Trustee hereby confirms and agrees that its security interest in and to the Aircraft granted under the JL Security Agreement is and shall be subject and subordinate in all respects to the Lien of this Indenture, and in the event the Indenture Trustee shall foreclose the Lien of this Indenture and sell or otherwise transfer the Aircraft, such sale or other transfer shall be free and clear of such security interest. Trust Indenture 100 - 95 - IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By:_________________________________ Name: Title: THE CHASE MANHATTAN BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By:_________________________________ Name: Title: Trust Indenture 101 EXHIBIT A TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-6] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1989 BN-6] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as amended and restated as of October 1, 1991 and as further amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and The Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover 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 any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated December 22, 1989 subjected to the Lien of such Indenture the airframe and engines therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on April 2, 1990 and assigned Conveyance No. V79847. WHEREAS, the Amended and Restated Indenture (which amended and restated the Original Indenture), as supplemented by Trust Indenture Supplement No. 2 dated October 24, 1991 subjected to the Lien of such Indenture the airframe and engines therein described, which Amended and Restated Indenture and Trust Indenture Supplement No. 2 have been duly recorded with the Federal Aviation Administration as one document on November 12, 1991 and assigned Conveyance No. Z91423. 102 - 2 - WHEREAS(1), the Indenture relates to the 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [3] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. ---- ---------------- ---------------- NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner Trustee has granted, bargained, sold, - -------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 103 - 3 - assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRFRAME(S) ( ) airframe(s) identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ---------------- -------------- together with all 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 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. Form of Trust Indenture Supplement 104 - 4 - As further security for the obligations referred to above and secured by the Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1989 BN-6] No. 3 of even date herewith (other than Excepted Payments) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 105 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By_________________________________ Title: Form of Trust Indenture Supplement 106 SCHEDULE I TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-6]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- -------- --------- Series A $11,936,662 02-Jan-2006 6.85% Series B $ 4,476,246 02-Jul 2002 6.93% Series C $ 4,476,247 02-Jan-2002 6.86% Series D $ 3,575,831 02-Jul-98 8.16%
107 EQUIPMENT NOTES AMORTIZATION SERIES A Aircraft: N626AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 108 SERIES B Aircraft: N626AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 109 SERIES C Aircraft: N626AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 110 SERIES D Aircraft: N626AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 111 SCHEDULE II TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-6] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. Schedule II-1 EX-4.35 36 RESTATED TRUST INDENTURE [GPA 1989 BN-10] 1 EXHIBIT 4.35 - -------------------------------------------------------------------------------- SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and THE CHASE MANHATTAN BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 77 Registration No. N631AW Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS Page ---- GRANTING CLAUSE............................................................. 3 HABENDUM CLAUSE............................................................. 7 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions.......................................... 9 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes...................................... 21 SECTION 2.02. Issuance and Terms of Equipment Notes........................ 27 SECTION 2.03. Payments from Trust Indenture Estate Only.......................................... 30 SECTION 2.04. Method of Payment............................................ 32 SECTION 2.05. Application of Payments...................................... 35 SECTION 2.06. Termination of Interest in Trust Indenture Estate.............................. 35 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes............................... 36 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes............................... 37 SECTION 2.09. Payment of Expenses on Transfer; Cancellation.................................. 38 SECTION 2.10. Mandatory Redemptions of Equipment Notes......................................... 38 SECTION 2.11. Redemptions; Notice of Redemption............................ 38 SECTION 2.12. Option to Purchase Equipment Notes........................... 39 SECTION 2.13. Subordination................................................ 41 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions................................... 41 SECTION 3.02. Event of Loss and Replacement................................ 43 SECTION 3.03. Payment After Indenture Event of Default, etc.................................. 44 SECTION 3.04. Certain Payments............................................. 47 SECTION 3.05. Other Payments............................................... 48 SECTION 3.06. Payments to Owner Trustee.................................... 48 SECTION 3.07. Investment of Amounts Held by Indenture Trustee....................................... 49 - i - Trust Indenture 3 Page ---- ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee....................................... 50 SECTION 4.02. Indenture Events of Default.................................. 51 SECTION 4.03. Certain Rights............................................... 54 SECTION 4.04. Remedies..................................................... 56 SECTION 4.05. Return of the Aircraft, etc.................................. 59 SECTION 4.06. Remedies Cumulative.......................................... 61 SECTION 4.07. Discontinuance of Proceedings................................ 61 SECTION 4.08. Waiver of Past Indenture Defaults............................ 62 SECTION 4.09. Indenture Trustee May Prove Debt............................. 62 SECTION 4.10. Limitations on Suits by Note Holders......................... 64 SECTION 4.11. Unconditional Right of Note Holders to Receive Principal, Interest and Premium, and to Institute Certain Suits.................... 65 SECTION 4.12. Exercise of Remedies by Foreign Note Holders....................................... 65 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default......................... 65 SECTION 5.02. Action Upon Instructions..................................... 66 SECTION 5.03. Indemnification.............................................. 67 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions..................... 68 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions.......... 68 SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts................. 69 SECTION 5.07. Indenture Supplements for Replacements....................... 73 SECTION 5.08. Effect of Replacement........................................ 73 SECTION 5.09. Notices, etc................................................. 73 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant............................. 74 SECTION 5.11. Evidence of Action Taken by Note Holder...................... 76 SECTION 5.12. Right of Revocation of Action Taken.......................... 76 - ii - Trust Indenture 4 Page ---- ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties.............................. 77 SECTION 6.02. Absence of Duties............................................ 77 SECTION 6.03. No Representations or Warranties as to Aircraft or Documents......................... 78 SECTION 6.04. No Segregation of Moneys; No Interest........................ 78 SECTION 6.05. Reliance; Agents; Advice of Counsel.......................... 79 SECTION 6.06. Capacity in Which Acting..................................... 80 SECTION 6.07. Compensation................................................. 80 SECTION 6.08. May Become Note Holder....................................... 80 SECTION 6.09. Further Assurances; Financing Statements..................... 80 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification..................................... 81 SECTION 7.02. Exculpation and Release of Liability......................... 82 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee............................ 82 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor............. 83 SECTION 8.03. Appointment of Separate Trustees............................. 84 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures.................................... 86 SECTION 9.02. Effect of Supplemental Indenture............................. 89 SECTION 9.03. Documents to Be Given to Trustee............................. 90 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures....................... 90 SECTION 9.05. Trustees Protected........................................... 90 SECTION 9.06. Documents Mailed to Note Holders............................. 90 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement............ 91 SECTION 9.08. Notices to Liquidity Provider................................ 91 - iii - Trust Indenture 5 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture.................................... 91 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders....................... 92 SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding................................... 92 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders............................................ 92 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease.............................. 92 SECTION 10.06. Notices..................................................... 93 SECTION 10.07. Severability................................................ 93 SECTION 10.08. No Oral Modifications or Continuing Waivers...................................... 93 SECTION 10.09. Successors and Assigns...................................... 93 SECTION 10.10. Headings.................................................... 94 SECTION 10.11. Normal Commercial Relations................................. 94 SECTION 10.12. Governing Law; Counterpart Form............................. 94 SECTION 10.13. Section 1110................................................ 94 EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements - iv - Trust Indenture 6 SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] (this "Second Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-10] No. 1 dated December 22, 1989, as further supplemented by Trust Agreement Supplement [GPA 1989 BN-10] No. 2 dated October 24, 1991, and as further supplemented by Trust Agreement Supplement [GPA 1989 BN-10] No. 3 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated December 22, 1989, which were recorded by the Federal Aviation Administration on December 27, 1989 as one instrument and assigned Conveyance No. Trust Indenture 7 - 2 - S86321 (as so supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as supplemented by Lease Supplement [GPA 1989 BN-10] No. 1 dated December 22, 1989, which were recorded by the Federal Aviation Administration on December 27, 1989 as one instrument and assigned Conveyance No. S86322 (as so supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Original Loan Participants (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into an Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of October 1, 1991, as supplemented by the Trust Indenture Supplement No. 2 [GPA 1989 BN-10], dated October 24, 1991, which were recorded by the Federal Aviation Administration on October 25, 1991 as one document and assigned Conveyance No. Q52003 (as amended, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into an Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] dated as of October 1, 1991, which amended and restated the Original Lease, as supplemented by Lease Supplement [GPA 1989 BN-10] No. 2 dated October 24, 1991, which were recorded by the Federal Aviation Administration on October 25, 1991 as one document and assigned Conveyance No. Q52004 (as amended, supplemented or otherwise modified to the date hereof, the "First Amended and Restated Lease") and (iii) pursuant to the First Amended and Restated Indenture, the Owner Trustee issued and sold to the Certificate Holders (as defined in the First Amended and Restated Indenture) Equipment Trust Certificates, Series BN-10 in exchange for the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the First Amended and Restated Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-10] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Second Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Equipment Trust Certificates issued to the Certificate Trust Indenture 8 - 3 - Holders pursuant to the First Amended and Restated Indenture shall be redeemed and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Second Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the First Amended and Restated Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Second Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make- Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts Trust Indenture 9 - 4 - from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments (which collectively, excluding Excepted Payments but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement (to the extent assigned to or for the benefit of the Owner Trustee), including the Consent and Guaranty; the Purchase Agreement Warranties Assignment, with the Consents and Agreements attached thereto; the Second Aircraft Warranty Bill of Sale; the BFE Bill of Sale; each notice, letter agreement or other document related to any of the foregoing entered into by or for the benefit of the Owner Trustee (or assigned to the Owner Trustee); in each case including, without limitation, (x) all rights of the Owner Trust Indenture 10 - 5 - Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Aircraft or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer or any other Person in respect of any determination of invalidity of any such document, it being agreed that the rights, powers and remedies referred to in the preceding clauses (x) and (y) are presently assigned and transferred to the Indenture Trustee and may, except as provided in Section 5.10 or elsewhere in this Indenture, be exercised by the Indenture Trustee without the necessity of proceeding under Section 4.04 to exercise remedies hereunder; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval under or with respect of any thereof or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or otherwise, arising out of any default under any Assigned Sublease, it being agreed that the rights, powers and remedies referred to above in this paragraph (3) are presently assigned and transferred to the Indenture Trustee and may, except as provided in Section 5.10 or elsewhere in this Indenture, be exercised by the Indenture Trustee without the necessity of proceeding under Section 4.04 to exercise remedies hereunder; (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, without Trust Indenture 11 - 6 - limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Owner Trustee in and to the same and every part thereof; (5) all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement, execution copies of the Purchase Agreement Warranties Assignment, and the original Second Aircraft Warranty Bill of Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the original BFE Bill of Sale. Concurrently with the delivery of the First Amended and Restated Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the First Amended and Restated Lease and Lease Supplement No. 2. Concurrently with the delivery of this Second Amended and Restated Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper original executed counterparts of the Second Amended and Restated Lease and Lease Supplement No. 3. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes at any time outstanding. Any and all properties referred Trust Indenture 12 - 7 - 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the 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 and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Under the Lease, the Lessee is directed to make all payments of Trust Indenture 13 - 8 - Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Trust Indenture 14 - 9 - Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. Trust Indenture 15 - 10 - "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended. "BFE Bill of Sale" means the full warranty (as to title) bill of sale covering the Buyer Furnished Equipment, transferring all right, title and interest therein to the Owner Trustee. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer and the Manufacturer's Subsidiary included in the Purchase Agreement Assignment and the Purchase Trust Indenture 16 - 11 - Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 450 West 33rd Street, New York, New York 10001, Attention: Corporate Trust Department, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C and Series D, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means December 22, 1989. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term unsecured debt rating from each Rating Agency of at least A- 3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution Trust Indenture 17 - 12 - organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to Section 13 of the Lease and not in support of any payment obligation of the Owner Trustee under any Indenture Document, (ii) any proceeds of public liability insurance in respect of the Aircraft payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Aircraft by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee, or any of their respective successors, permitted assigns, directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Guarantor under the Tax Indemnification Agreement, as the case may be, and not in support of any payment obligation of the Owner Trustee under any Indenture Document, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or Trust Indenture 18 - 13 - proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Lease, and (vii) subject to the last sentence of Section 5.10 hereof, any right to enforce the payment of any amount described in clauses (i) through (vi) above and the proceeds thereof. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this Second Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Second Aircraft Warranty Bill of Sale; the Purchase Agreement, including the Consent and Guaranty (to the extent assigned to or for the benefit of the Owner Trustee); the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto; and the BFE Bill of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. Trust Indenture 19 - 14 - "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Aircraft and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated December 22, 1989, which was recorded as one instrument by the FAA with the Original Indenture, Trust Indenture Supplement No. 2 dated October 24, 1991, which was recorded as one instrument by the FAA with the First Amended and Restated Indenture, and Trust Indenture Supplement No. 3 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this Second Amended and Restated Indenture. "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as amended and restated by the First Amended and Restated Lease, and as assigned and further amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-10] dated as of the date hereof and Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] dated as of the date hereof and supplemented by Lease Supplement [GPA 1989 BN-10] No. 3 dated November 26, Trust Indenture 20 - 15 - 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Second Amended and Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of the Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Trust Indenture 21 - 16 - the Series C Equipment Notes and Series D Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. Trust Indenture 22 - 17 - "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease and the First Amended and Restated Lease. "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated December 22, 1989 and as in effect immediately prior to the amendment and restatement thereof dated as of October 1, 1991, which were recorded as one instrument by the FAA on December 27, 1989 and assigned Conveyance No. S86321. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Aircraft Sublease Agreement [GPA 1989 BN-10] dated as of September 21, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means ________________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the four Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. Trust Indenture 23 - 18 - "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the four separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1989 BN-10] dated the Delivery Date, between the Original Head Lessee and the Owner Trustee. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1989 BN-10] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Trust Indenture 24 - 19 - Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 3. "Second Aircraft Warranty Bill of Sale" means the full warranty (as to title) bill of sale covering the Aircraft (excluding all of the Buyer Furnished Equipment to be covered by the BFE Bill of Sale) executed by the Original Head Lessee in favor of the Owner Trustee, dated December 22, 1990. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in Trust Indenture 25 - 20 - the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1989 BN-10] DATED AS OF DECEMBER 19, 1989, AS AMENDED. SERIES [A/B/C/D] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N631AW. No. ____ Date: [________, 1996] $____________________ DEBT RATE MATURITY DATE [_________] [__________,____] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1989 BN-10], dated as of December 19, 1989, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $________ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Trust Indenture 27 - 22 - Accrued but unpaid interest shall be due and payable in semi-annual installments commencing on January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including ___________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10], dated as of November 26, 1996, between the Owner Trustee and The Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance Trust Indenture 28 - 23 - of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes referred to in the Indenture which have been or are to be issued Trust Indenture 29 - 24 - by the Owner Trustee pursuant to the terms of the Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3), and this Equipment Note is issued subject to such provisions. The Note Holder of this - -------------------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. Trust Indenture 30 - 25 - Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](4) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * - -------- (4) To be inserted in the case of a Series B, Series C or Series D Equipment Note. Trust Indenture 31 - 26 - IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. THE CHASE MANHATTAN BANK, as Indenture Trustee By:_______________________________ Name: Title: Trust Indenture 32 - 27 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid ---------------- ---------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in four separate series consisting of Series A, Series B, Series C and Series D and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Equipment Trust Certificates issued under the First Amended and Restated Trust Indenture shall be concurrently redeemed. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Trust Indenture 33 - 28 - Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of Trust Indenture 34 - 29 - the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes", "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. Trust Indenture 35 - 30 - The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Aircraft. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) Trust Indenture 36 - 31 - contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Trust Indenture 37 - 32 - Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds Trust Indenture 38 - 33 - until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding Taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States Taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional Trust Indenture 39 - 34 - documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income Tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding Tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding Taxes at the appropriate rate under law (and such withholding shall constitute payment in Trust Indenture 40 - 35 - respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trust Indenture 41 - 36 - Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the Trust Indenture 42 - 37 - amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Trust Indenture 43 - 38 - Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to Trust Indenture 44 - 39 - each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Trust Indenture 45 - 40 - Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. Trust Indenture 46 - 41 - SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full and (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as Trust Indenture 47 - 42 - rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; and (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other Trust Indenture 48 - 43 - amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Airframe or the Airframe and one or both Engines as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and Trust Indenture 49 - 44 - third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Airframe or a Replacement Airframe and one or more Replacement Engines are to be substituted for the Airframe or the Airframe and one or both Engines subject to such Event of Loss as provided in Section 11 of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections. (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Airframe or the Airframe and one or both Engines) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Trust Indenture 50 - 45 - Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus 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, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due Trust Indenture 51 - 46 - thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder Trust Indenture 52 - 47 - plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section Trust Indenture 53 - 48 - 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 Trust Indenture 54 - 49 - as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section. Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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. Trust Indenture 55 - 50 - ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; Trust Indenture 56 - 51 - (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; 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 the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section Trust Indenture 57 - 52 - 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or Trust Indenture 58 - 53 - (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure is not remedied within a period of 30 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 Trust Indenture 59 - 54 - 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Aircraft shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the expiry of the applicable grace period specified in the Lease with respect to such default) after notice of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the expiry of any applicable grace period specified in the Lease with respect to such default) after notice of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. Solely for the purpose of determining whether there exists an Indenture Event of Default, (a) any timely payment by Trust Indenture 60 - 55 - 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing or would result therefrom, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease as to Trust Indenture 61 - 56 - (i) each of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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 the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Aircraft, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written Trust Indenture 62 - 57 - notice of the initial exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have Trust Indenture 63 - 58 - the right (without affecting in any way any right or remedy of the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Trust Indenture 64 - 59 - Equipment Notes 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 Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. Except as otherwise provided in Section 2.12, no Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Aircraft, etc. (a) If an Indenture Event of Default shall have occurred and be continuing, at the request of the Indenture Trustee the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such 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 designated by the Indenture Trustee, at such time or times and place or places as the Trust Indenture 65 - 60 - Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee Trust Indenture 66 - 61 - hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, 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 Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 Trust Indenture 67 - 62 - reason or shall have been determined adversely to the Indenture Trustee or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. SECTION 4.09. Indenture Trustee May Prove Debt. If the Owner Trustee shall fail to pay any amount payable hereunder or under the Equipment Notes, the Indenture Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Owner Trustee or other obligor upon the Equipment Notes and collect in the manner provided by law out of the property of the Owner Trustee or other obligor upon the Equipment Notes, wherever situated the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Owner Trustee under the Bankruptcy Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Owner Trustee or its property, or in case of any other comparable judicial proceedings relative to the Owner Trustee upon the Equipment Notes, or to the property of the Owner Trustee, the Indenture Trustee, irrespective of whether the Principal Amount Trust Indenture 68 - 63 - of the Equipment Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of Principal Amount and interest owing and unpaid in respect of the Equipment Notes, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation, expenses and disbursements to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Note Holders allowed in any judicial proceedings relative to the Owner Trustee or to the property of the Owner Trustee, (b) unless prohibited by applicable law and regulations, to vote on behalf of the Note Holders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or Person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Note Holders and of the Indenture Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Note Holders (by such Note Holder's acceptance of an Equipment Note) to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to the Note Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation, expenses and disbursements to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith. Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Note Holder any plan of Trust Indenture 69 - 64 - reorganization, arrangement, adjustment or composition affecting the Equipment Notes or the rights of any Holder thereof, or to authorize the Indenture Trustee to vote in respect of the claim of any Note Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. All rights of action and of asserting claims under this Indenture, or under any of the Equipment Notes, may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Equipment Notes or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Note Holders. In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Note Holders, and it shall not be necessary to make any Note Holders parties to any such proceedings. SECTION 4.10. Limitations on Suits by Note Holders. No Note Holder shall have any right to pursue a remedy under this Indenture or any Equipment Note, unless such Note Holder previously shall have given to the Indenture Trustee written notice of an Indenture Default and of the continuance thereof, as hereinbefore provided, and unless also a Majority in Interest of Note Holders shall have made a written request to the Indenture Trustee to pursue such remedy and shall have offered to the Indenture Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to pursue such remedy and no direction inconsistent with such written request shall have been given to the Indenture Trustee during such 60-day period pursuant to Section 5.02 hereof; it being understood and intended, and being expressly covenanted by each Note Holder and the Indenture Trustee, that no one or more Note Holders shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Note Holder or, except as otherwise provided herein (including, without limitation, Section 2.13), to obtain or seek to obtain priority over or preference to any other such Note Holder or to Trust Indenture 70 - 65 - enforce any right under this Indenture, except in the manner herein provided. For the protection and enforcement of the provisions of this Section 4.10, each and every Note Holder and the Indenture Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 4.11. Unconditional Right of Note Holders to Receive Principal, Interest and Premium, and to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Equipment Note, the right of any Note Holder to receive payment of the Principal Amount of and interest on such Equipment Note on or after the respective due dates expressed in such Equipment Note, or, subject to Section 4.10, to institute suit in a manner consistent with the limitations contained in Section 4.04(a) hereof for the enforcement of any such payment on or after such respective dates as herein provided, shall not be impaired or affected without the consent of such Note Holder. SECTION 4.12. Exercise of Remedies by Foreign Note Holders. If the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time when (i) the Aircraft is registered with the Federal Aviation Administration, (ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes is held by one or more Persons which are not a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV as a result of the occurrence of an Indenture Event of Default which is not a Lease Event of Default, the Indenture Trustee shall make arrangements, if any, as may be required by law so that such exercise of remedies shall not result in the ineligibility of the Aircraft to be registered under the Federal Aviation Act. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to the Trust Indenture 71 - 66 - terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Aircraft or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note Holders, the Indenture Trustee shall take such of the following actions as may be specified in such instructions: (i) exercise Trust Indenture 72 - 67 - 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 to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel; provided, however, that this provision will not interfere with the Owner Participant's right to consent to such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 Trust Indenture 73 - 68 - 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 hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Aircraft or any other part of the Trust Trust Indenture 74 - 69 - Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts. (a) If at any time and from time to time, the Airframe or Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a), 11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s), as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine(s) 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Airframe and/or Engine(s) so to be released and the Replacement Airframe and/or Replacement Engine(s). (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number; (ii) a description of the Replacement Airframe (including the manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number) to be received as consideration for the Airframe to be released; (iii) that on the date of the Indenture Supplement relating to the Replacement Airframe the Owner Trustee will hold legal title to such Replacement Airframe free and clear of all Liens except Permitted Liens, that such Replacement Airframe will on such date be in good operating condition, Trust Indenture 75 - 70 - and that such Replacement Airframe has been or, substantially concurrently with such replacement, is in the process of being duly registered with the Owner Trustee as owner thereof under the Federal Aviation Act or under the law then applicable to the registration of the Aircraft and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and the Lessee or a Permitted Sublessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Section 12 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of a like Airbus A320-231 model airframe with equivalent or better modifica- tion status; (vi) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (vii) an appraisal prepared in accordance with the Appraisal Procedure (as defined in the Lease) confirms that the Replacement Airframe has a value, utility and remaining useful life at least equal to that of the Airframe which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of the Lease whether or not they are in fact so maintained; and (viii) that each of the conditions specified in Section 11(a) and (c) of the Lease with respect to such Replacement Airframe have been satisfied. B. With respect to the replacement of any Engine: (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 Trust Indenture 76 - 71 - hold title to such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that such Replacement Engine is the same or an improved model as the Engine to be released; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be less than the then value, remaining useful life and utility of the Engine requested to be released, assuming such Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of 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; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to such Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) With respect to a Replacement Airframe, an appraisal from BK Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of independent aircraft appraisers satisfactory to the Indenture Trustee confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof. (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the Trust Indenture 77 - 72 - requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Airframe and/or Replacement Engine(s) have been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and/or Replacement Engine and the Lien of this Indenture on such Replacement Airframe and/or Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Airframe and, if an Event of Loss with respect to the Aircraft has occurred, the Replacement Engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Airframe or Trust Indenture 78 - 73 - Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Airframe and/or Engine(s) being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Airframe or Engine(s) being replaced shall be applicable to such Replacement Airframe or Replacement Engine(s) with the same force and effect as if such Replacement Airframe or Replacement Engine(s) were the same airframe or engine(s), as the case may be, as the Airframe or Engine(s) being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Trust Indenture 79 - 74 - Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Aircraft; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any amendments, modifications, waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, Trust Indenture 80 - 75 - or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee 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 pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 Trust Indenture 81 - 76 - hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. Trust Indenture 82 - 77 - ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee shall be answerable or accountable under any circumstances, except for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the 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 on the Aircraft, whether or not the Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of Trust Indenture 83 - 78 - any Lien of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Aircraft. SECTION 6.03. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE 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 ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Aircraft the Owner Trustee shall have received whatever interest in the Aircraft was conveyed to it under the Second Aircraft Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) be liable for any interest thereon; provided that any Trust Indenture 84 - 79 - 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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, except that any such execution or performance shall not derogate from the Indenture Trustee's obligations under the third sentence of Section 2.04(a), the Indenture Trustee and the Owner Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Trust Indenture 85 - 80 - Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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. Trust Indenture 86 - 81 - ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification. The Owner Trustee, not individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 from and after the Restatement Date (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 Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants, thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the Trust Indenture 87 - 82 - extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. Trust Indenture 88 - 83 - SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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 and assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such Trust Indenture 89 - 84 - predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and shall also be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust Indenture Estate or any part Trust Indenture 90 - 85 - 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; Trust Indenture 91 - 86 - (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate 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. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived Trust Indenture 92 - 87 - in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any material respect, and (iii) the Lessee may effect the re-registration of the Aircraft in accordance with but always subject to the terms and conditions applicable thereto specified in Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included Trust Indenture 93 - 88 - in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. Trust Indenture 94 - 89 - (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee, no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part Trust Indenture 95 - 90 - of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have Trust Indenture 96 - 91 - been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Aircraft, any Engines or other property thereto or to release the Aircraft, any Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Aircraft and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and 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 as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part of the Trust Indenture Estate and the final distribution by the Trust Indenture 97 - 92 - Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Aircraft. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of the Aircraft, except in accordance with the provisions of the Lease. Trust Indenture 98 - 93 - SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 450 West 33rd Street, 15th Floor, New York, New York 10001, Attention: Corporate Trust Department (telecopy: (212) 946-8160) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 Trust Indenture 99 - 94 - and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any Trust Indenture 100 - 95 - instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 101 - 96 - IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: _________________________________ Name: Title: THE CHASE MANHATTAN BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By: _________________________________ Name: Title: Trust Indenture 102 EXHIBIT A TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1989 BN-10] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as amended and restated as of October 1, 1991 and as further amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and The Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover 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 any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated December 22, 1989 subjected to the Lien of such Indenture the airframe and engines therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on December 27, 1989 and assigned Conveyance No. S86321. WHEREAS, the Amended and Restated Indenture (which amended and restated the Original Indenture), as supplemented by Trust Indenture Supplement No. 2 dated October 24, 1991 subjected to the Lien of such Indenture the airframe and engines therein described, which Amended and Restated Indenture and Trust Indenture Supplement No. 2 have been duly recorded with the Federal Aviation Administration as one document on October 25, 1991 and assigned Conveyance No. Q52003. 103 - 2 - WHEREAS(1), the Indenture relates to the 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [(3)] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. ---- ---------------- ---------------- NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner Trustee has granted, bargained, sold, - --------------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 104 - 3 - assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRFRAME(S) ( ) airframe(s) identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ------ ------------- together with all 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 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. Form of Trust Indenture Supplement 105 - 4 - As further security for the obligations referred to above and secured by the Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1989 BN-10] No. 3 of even date herewith (other than Excepted Payments) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 106 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By_________________________ Title: Form of Trust Indenture Supplement 107 SCHEDULE I TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- ---- --------- Series A $11,936,662 02-Jan-2006 6.85% Series B $ 4,476,246 02-Jul-2002 6.93% Series C $ 4,476,247 02-Jan-2002 6.86% Series D $ 3,575,831 02-Jul-98 8.16% 108 EQUIPMENT NOTES AMORTIZATION SERIES A Aircraft: N631AW Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 109 SERIES B Aircraft: N631AW Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 110 SERIES C Aircraft: N631AW Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 111 SERIES D Aircraft: N631AW Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 112 SCHEDULE II TO SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. Schedule II-1 EX-4.36 37 RESTATED TRUST INDENTURE [GPA 1989 BN-12] 1 EXHIBIT 4.36 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-12] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and THE CHASE MANHATTAN BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 82 Registration No. N633AW Leased by America West Airlines, Inc. 2 TABLE OF CONTENTS Page GRANTING CLAUSE...................................................... 3 HABENDUM CLAUSE...................................................... 6 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions................................... 8 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes............................... 21 SECTION 2.02. Issuance and Terms of Equipment Notes................. 26 SECTION 2.03. Payments from Trust Indenture Estate Only............................................ 29 SECTION 2.04. Method of Payment..................................... 31 SECTION 2.05. Application of Payments............................... 33 SECTION 2.06. Termination of Interest in Trust Indenture Estate................................ 34 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes................................. 34 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes................................. 36 SECTION 2.09. Payment of Expenses on Transfer; Cancellation.................................... 36 SECTION 2.10. Mandatory Redemptions of Equipment Notes........................................... 37 SECTION 2.11. Redemptions; Notice of Redemption..................... 37 SECTION 2.12. Option to Purchase Equipment Notes.................... 38 SECTION 2.13. Subordination......................................... 39 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions............................ 40 SECTION 3.02. Event of Loss and Replacement......................... 42 SECTION 3.03. Payment After Indenture Event of Default, etc.................................... 43 SECTION 3.04. Certain Payments...................................... 46 SECTION 3.05. Other Payments........................................ 46 SECTION 3.06. Payments to Owner Trustee............................. 47 SECTION 3.07. Investment of Amounts Held by Indenture Trustee......................................... 47 (i) 3 Page ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee......................................... 48 SECTION 4.02. Indenture Events of Default........................... 49 SECTION 4.03. Certain Rights........................................ 52 SECTION 4.04. Remedies.............................................. 54 SECTION 4.05. Return of the Aircraft, etc........................... 57 SECTION 4.06. Remedies Cumulative................................... 59 SECTION 4.07. Discontinuance of Proceedings......................... 59 SECTION 4.08. Waiver of Past Indenture Defaults..................... 60 SECTION 4.09. Exercise of Remedies by Foreign Note Holders......................................... 60 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default.................. 60 SECTION 5.02. Action Upon Instructions.............................. 62 SECTION 5.03. Indemnification....................................... 62 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions....................... 63 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions............ 63 SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts................... 64 SECTION 5.07. Indenture Supplements for Replacements................ 67 SECTION 5.08. Effect of Replacement................................. 68 SECTION 5.09. Notices, etc.......................................... 68 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant............................... 68 SECTION 5.11. Evidence of Action Taken by Note Holder............... 71 SECTION 5.12. Right of Revocation of Action Taken................... 71 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties....................... 71 SECTION 6.02. Absence of Duties..................................... 72 SECTION 6.03. No Representations or Warranties as to Aircraft or Documents........................... 72 SECTION 6.04. No Segregation of Moneys; No Interest................. 73 (ii) 4 Page SECTION 6.05. Reliance; Agents; Advice of Counsel................... 73 SECTION 6.06. Capacity in Which Acting.............................. 74 SECTION 6.07. Compensation.......................................... 74 SECTION 6.08. May Become Note Holder................................ 75 SECTION 6.09. Further Assurances; Financing State- ments........................................... 75 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification.............................. 75 SECTION 7.02. Exculpation and Release of Liability.................. 76 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee..................... 77 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor............... 77 SECTION 8.03. Appointment of Separate Trustees...................... 78 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures...................................... 81 SECTION 9.02. Effect of Supplemental Indenture...................... 84 SECTION 9.03. Documents to Be Given to Trustee...................... 84 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures......................... 84 SECTION 9.05. Trustees Protected.................................... 84 SECTION 9.06. Documents Mailed to Note Holders...................... 84 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement.............. 85 SECTION 9.08. Notices to Liquidity Provider......................... 85 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture............................. 85 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders......................... 86 (iii) 5 SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding..................................... 86 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders........................ 86 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease................................ 86 SECTION 10.06. Notices.............................................. 87 SECTION 10.07. Severability......................................... 87 SECTION 10.08. No Oral Modifications or Continuing Waivers........................................ 87 SECTION 10.09. Successors and Assigns............................... 88 SECTION 10.10. Headings............................................. 88 SECTION 10.11. Normal Commercial Relations.......................... 88 SECTION 10.12. Governing Law; Counterpart Form...................... 88 SECTION 10.13. Section 1110......................................... 88 EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements (iv) 6 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-12] FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-12] (this "First Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-12] No. 1 dated December 28, 1989, and as further supplemented by Trust Agreement Supplement [GPA 1989 BN-12] No. 2 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated December 28, 1989, which were recorded by the Federal Aviation Administration on January 2, 1990 as one instrument and assigned Conveyance No. V78636 (as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee Trust Indenture 7 - 2 - and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as supplemented by Lease Supplement [GPA 1989 BN-12] No. 1 dated December 28, 1989, which were recorded by the Federal Aviation Administration on January 2, 1990 as one instrument and assigned Conveyance No. V78637, as further supplemented by Lease Supplement [GPA 1989 BN-12] No. 2 dated as of December 31, 1991, which was not filed for recordation with the Federal Aviation Administration (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-12] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Original Loan Certificates issued pursuant to the Original Indenture shall be prepaid and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this First Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; Trust Indenture 8 - 3 - WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this First Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments and Excepted Rights (which collectively, excluding Excepted Payments and Excepted Rights but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time Trust Indenture 9 - 4 - acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranty Assignment); the Purchase Agreement Warranty Assignment, with the Consents and Agreements attached thereto; the Second Warranty Bill of Sale; the BFE Bill of Sale; and the Bills of Sale; in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Aircraft or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer, the Manufacturer's Subsidiary or any other Person in respect of any determination of invalidity of any such document; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval under or with respect of any thereof or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Trust Indenture 10 - 5 - Assignment or by statute or at law or in equity, or otherwise, arising out of any default under any Assigned Sublease; (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Owner Trustee in and to the same and every part thereof; (5) all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii) payment in amounts which have been distributed to the Owner Trustee or any other Person in accordance with the provisions of this Agreement, AND SUBJECT TO Sections 2.03, 5.10 and 9.01 hereof. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement Warranty Assignment and the Consents and Agreements attached thereto, and the original Second Aircraft Warranty Bill of Sale and the BFE Bill of Sale. The Owner Trustee thereafter Trust Indenture 11 - 6 - delivered to the Indenture Trustee the chattel paper original executed Lease Supplement No. 2. Concurrently with the delivery of this Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper original executed counterparts of the Amended and Restated Lease and Lease Supplement No. 3. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the 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 and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments and Excepted Rights) due and to become due to Trust Indenture 12 - 7 - the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Under the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments and Excepted Trust Indenture 13 - 8 - Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments and Excepted Rights. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments (including all annexes, appendices, exhibits, schedules and supplements thereto) as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be Trust Indenture 14 - 9 - references to and include their respective permitted successors and assigns. "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended. "Bills of Sale" means the FAA Bills of Sale and the Warranty Bill of Sale. "BFE Bill of Sale" means the full warranty (as to title) bill of sale covering the Buyer Furnished Equipment, executed by the Braniff, Inc., a Nevada corporation in favor of the Owner Trustee, dated on or prior to December 28, 1989. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all Trust Indenture 15 - 10 - amounts drawn under one or more Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer included in the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 450 West 33rd Street, New York, New York 10001, Attention: Corporate Trust Department, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C and Series D, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means December 28, 1989. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the Trust Indenture 16 - 11 - securities of such depository institution has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) any and all indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document) or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to the Lease (including, without limitation, Section 13 thereof and any corresponding payment of Supplemental Rent under the Lease), (ii) any proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Aircraft by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document), or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Trust Indenture 17 - 12 - Section 10 of the Lease or by the Lessee or the Parent Guarantor under the Tax Indemnification Agreement or the Amended and Restated Head Lease TIA (as defined in the Refunding Agreement), as the case may be, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Lease, (vii) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate (or a portion thereof), (viii) any amount payable to the Owner Trustee, the Trust Company or the Owner Participant or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders attributable to the period prior to or on the Restatement Date or under the Original Participation Agreement, the Original Lease, the Parent Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the Amended and Restated Sublease TIA (as such terms are defined in the Refunding Agreement) or Retained Head Lease Rights and Obligations (as such term is defined in the Refunding Agreement), and (ix) subject to the last sentence of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner Participant or the Trust Company under the Operative Documents, whether or not a Lease Event of Default, a Lease Default, an Indenture Default or an Indenture Trustee Event has occurred and is continuing to demand, collect, sue for, give notices, make determinations, enforce or exercise all rights with respect to and otherwise obtain all amounts described in clauses (i) through (viii) above and the proceeds thereof. "Excepted Rights" means (i) those rights of the Owner Participant and the Owner Trustee under Section 5.10 of this Indenture, (ii) all rights under the Equity Collateral to make a claim for, collect and retain all amounts payable with respect to any Equity Collateral, (iii) all rights of the Owner Participant, the Trust Company or the Owner Trustee to compromise or waive any such right or modify, amend or waive any provision of any Operative Document conferring such rights with respect to Excepted Payments, and (iv) all rights of the Owner Trustee to exercise any election or option, or to make any decision or determina- Trust Indenture 18 - 13 - tion, or to give or receive any notice, consent, waiver or approval with respect to Excepted Payments. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this First Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranty Assignment); the Purchase Agreement Warranty Assignment and the Consents and Agreements attached thereto; the Second Aircraft Warranty Bill of Sale; the BFE Bill of Sale; and the Bills of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, Trust Indenture 19 - 14 - supplemented or otherwise modified from time to time in accordance with its terms. "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Aircraft and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated December 28, 1989, which was recorded as one instrument by the FAA with the Original Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this First Amended and Restated Indenture. "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as assigned, amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-12] dated as of the date hereof and Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] dated as of the date hereof and supplemented by Lease Supplement [GPA 1989 BN-12] No. 3 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. Trust Indenture 20 - 15 - "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Amended and Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Series C Equipment Notes and Series D Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market Trust Indenture 21 - 16 - either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease. Trust Indenture 22 - 17 - "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated December 28, 1989, which were recorded as one instrument by the FAA on January 2, 1990 and assigned Conveyance No. V78636. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Aircraft Sublease Agreement [GPA 1989 BN-12] dated as of September 21, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means ____________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the four Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the four separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. Trust Indenture 23 - 18 - "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Assignment" means the Purchase Agreement Assignment [GPA 1989 BN-12], dated as of the Delivery Date, between the Parent Guarantor and the Original Head Lessee, together with the Consents and Agreements attached thereto, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof and thereof. "Purchase Agreement Warranty Assignment" means the Purchase Agreement Warranty Assignment [GPA 1989 BN-12], dated as of the Delivery Date, between the Original Head Lessee and the Owner Trustee together with the Consents and Agreements attached thereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1989 BN-12] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. Trust Indenture 24 - 19 - "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 2. "Second Aircraft Warranty Bill of Sale" means the full warranty (as to title) bill of sale covering the Aircraft (excluding all of the Buyer Furnished Equipment to be covered by the BFE Bill of Sale) executed by the Original Head Lessee in favor of the Owner Trustee, dated December 28, 1989. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the Trust Indenture 25 - 20 - consent thereto given by the sublessee thereunder) with respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments and Excepted Rights. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Warranty Bill of Sale" means a full warranty (as to title) bill of sale covering the Aircraft (excluding all Buyer Furnished Equipment) executed by the Original Head Lessee in favor of the Owner Trustee dated the Delivery Date. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1989 BN-12] DATED AS OF DECEMBER 19, 1989, AS AMENDED. SERIES [A/B/C/D] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N633AW. No.____________ Date: [________, 1996] $___________________ DEBT RATE MATURITY DATE [ ] [ , ] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1989 BN-12], dated as of December 19, 1989, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $_______ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing on January 2, 1997, and thereafter Trust Indenture 27 - 22 - on July 2 and January 2 of each year, to and including ___________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the First Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-12], dated as of November 26, 1996, between the Owner Trustee and The Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover Trust Company), a New York corporation (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 28 - 23 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 29 - 24 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes] (1) [Series B Equipment Notes] (2) [Series C Equipment Notes] (3), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as - -------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. Trust Indenture 30 - 25 - provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](4) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. THE CHASE MANHATTAN BANK, as Indenture Trustee By:_______________________________ Name: Title: - -------- (4) To be inserted in the case of a Series B, Series C or Series D. Trust Indenture 31 - 26 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in four separate series consisting of Series A, Series B, Series C and Series D and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Original Loan Certificates issued under the Original Indenture shall be concurrently prepaid. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 32 - 27 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 33 - 28 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of individuals who were at any time the proper officers of the Owner Trust Indenture 34 - 29 - Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Aircraft. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such other agreements to the contrary notwithstanding (except for any Trust Indenture 35 - 30 - express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Note Holder or the Indenture Trust Indenture 36 - 31 - Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such funds were received after 12:00 noon, New York City time, at the Trust Indenture 37 - 32 - place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trust Indenture 38 - 33 - Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Trust Indenture 39 - 34 - Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request Trust Indenture 40 - 35 - from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Trust Indenture 41 - 36 - Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. Subject to compliance by the Note Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes within 10 Business Days of the date of the written request therefor from the Note Holder. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, Trust Indenture 42 - 37 - the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in Trust Indenture 43 - 38 - immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the Trust Indenture 44 - 39 - preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. Trust Indenture 45 - 40 - (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full and (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under Trust Indenture 46 - 41 - each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; and (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. Trust Indenture 47 - 42 - SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Airframe or the Airframe and one or both Engines as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Airframe or a Replacement Airframe and one or more Replacement Engines are to be substituted for the Airframe or the Airframe and one or both Engines subject to such Event of Loss as provided in Section 11 of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections . (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Airframe or the Airframe and one or both Engines) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account Trust Indenture 48 - 43 - of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus 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, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 Trust Indenture 49 - 44 - hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; Trust Indenture 50 - 45 - (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. Trust Indenture 51 - 46 - SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, Trust Indenture 52 - 47 - in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 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 "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section ; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section . Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Owner Trustee or, in the event the Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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 Trust Indenture 53 - 48 - 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. ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Indenture 54 - 49 - Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; 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 the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being Trust Indenture 55 - 50 - given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant with responsibility for or familiarity with the transactions contemplated hereunder and under the other Operative Documents (or any Vice President) shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person (if any), as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses Trust Indenture 56 - 51 - (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure, in any case and either individually or together with other then existing failures, shall have a material adverse effect on the rights and interests of the Indenture Trustee or any Note Holder and is not remedied within a period of 45 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 (if any) that may guarantee or support the obligations of an Owner Participant not Trust Indenture 57 - 52 - originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Aircraft shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the second day after the expiry of the applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the second day after the expiry of any applicable grace period specified in Trust Indenture 58 - 53 - the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee or by demanding Excepted Payments or Excepted Rights; provided, however, 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 Trust Indenture 59 - 54 - paid to, the Indenture Trustee for distribution as provided in Section 3.03 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease (after giving effect to any applicable grace period) as to (i) each of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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, and if the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment and may take possession of all or any Trust Indenture 60 - 55 - part of the properties covered or intended to be covered by the Lien and security interest created hereby or pursuant hereto but, in the case of the Aircraft, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice Trust Indenture 61 - 56 - to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and Trust Indenture 62 - 57 - before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. No Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof and unless the Owner Participant shall have theretofore purchased the Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall have occurred and be continuing and the Equipment Notes shall have Trust Indenture 63 - 58 - been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, 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 designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, Trust Indenture 64 - 59 - income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, 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 Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder shall have instituted Trust Indenture 65 - 60 - 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time when (i) the Aircraft is registered with the Federal Aviation Administration, (ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes is held by one or more Persons which are not a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV as a result of the occurrence of an Indenture Event of Default which is not a Lease Event of Default, the Indenture Trustee shall make arrangements, if any, as may be required by law so that such exercise of remedies shall not result in the ineligibility of the Aircraft to be registered under the Federal Aviation Act. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Trust Indenture 66 - 61 - Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Aircraft or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. Trust Indenture 67 - 62 - SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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 to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture and nothing in this Indenture contained shall require the Indenture Trust Indenture 68 - 63 - 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 hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Aircraft or any other part of the Trust Trust Indenture 69 - 64 - Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts. (a) If at any time and from time to time, the Airframe or Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a), 11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s), as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine(s) 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Airframe and/or Engine(s) so to be released and the Replacement Airframe and/or Replacement Engine(s). (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number; (ii) a description of the Replacement Airframe (including the manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number) to be received as consideration for the Airframe to be released; (iii) that on the date of the Indenture Supplement relating to the Replacement Airframe the Owner Trustee will hold legal title to such Replacement Airframe free and clear of all Liens except Permitted Liens, that such Replacement Airframe will on such date be in good operating condition, and that such Replacement Airframe has been or, substantially concurrently with such replacement, is in the Trust Indenture 70 - 65 - process of being duly registered with the Owner Trustee as owner thereof under the Federal Aviation Act or under the law then applicable to the registration of the Aircraft and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and the Lessee or a Permitted Sublessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Section 12 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of a like Airbus A320-231 model airframe with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988; (vi) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (vii) an appraisal prepared in accordance with the Appraisal Procedure (as defined in the Lease) confirms that the Replacement Airframe has a value, utility and remaining useful life at least equal to that of the Airframe which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of the Lease whether or not they are in fact so maintained; and (viii) that each of the conditions specified in Section 11(a) and (c) of the Lease with respect to such Replacement Airframe have been satisfied. B. With respect to the replacement of any Engine: (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 hold title to such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that Trust Indenture 71 - 66 - such Replacement Engine is the same or an improved model as the Engine to be released; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be less than the then value, remaining useful life and utility of the Engine requested to be released, assuming such Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of 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; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to such Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) With respect to a Replacement Airframe, an appraisal from BK Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of independent aircraft appraisers satisfactory to the Indenture Trustee confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof. (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; Trust Indenture 72 - 67 - (ii) the Replacement Airframe and/or Replacement Engine(s) have been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and/or Replacement Engine and the Lien of this Indenture on such Replacement Airframe and/or Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Airframe and, if an Event of Loss with respect to the Aircraft has occurred, the Replacement Engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing Trust Indenture 73 - 68 - the Airframe and/or Engine(s) being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Airframe or Engine(s) being replaced shall be applicable to such Replacement Airframe or Replacement Engine(s) with the same force and effect as if such Replacement Airframe or Replacement Engine(s) were the same airframe or engine(s), as the case may be, as the Airframe or Engine(s) being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excepted Payments from the Lessee, exercise any election or Trust Indenture 74 - 69 - option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Aircraft; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) (i) the Indenture Trustee shall not, without the consent of the Owner Trustee, enter into, execute and deliver amendments or modifications in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment and (ii) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (A) enter into, execute and deliver waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; Trust Indenture 75 - 70 - (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee 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 pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. Trust Indenture 76 - 71 - SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee shall be answerable or accountable under any circumstances, except for their own willful misconduct or gross negligence Trust Indenture 77 - 72 - (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the 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 on the Aircraft, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Aircraft. SECTION 6.03. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, Trust Indenture 78 - 73 - COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE 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 ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Aircraft the Owner Trustee shall have received whatever interest in the Aircraft was conveyed to it under the Second Aircraft Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding Trust Indenture 79 - 74 - 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 except that any such execution or performance shall not derogate from the Indenture Trustee's obligations under the third sentence of Section 2.04(a), the Indenture Trustee and the Owner Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held Trust Indenture 80 - 75 - by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 from and after the Restatement Date (whether or not also agreed to be Trust Indenture 81 - 76 - indemnified against by any other Person under any other document) in any way relating to or arising out of this Indenture, the Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants, thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant Trust Indenture 82 - 77 - (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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 Trust Indenture 83 - 78 - 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 and assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and shall also be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Trust Indenture 84 - 79 - Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and Trust Indenture 85 - 80 - act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. Trust Indenture 86 - 81 - ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any material respect and (iii) the Lessee may effect the re-registration of the Aircraft in accordance with but always subject to the terms and conditions applicable thereto specified in Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein Trust Indenture 87 - 82 - contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Trust Indenture 88 - 83 - Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. Trust Indenture 89 - 84 - (d) Without the consent of the Lessee no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Trust Indenture 90 - 85 - Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Aircraft, any Engines or other property thereto or to release the Aircraft, any Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Aircraft and release of the Indenture Documents Trust Indenture 91 - 86 - 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 Trustee to give effect to such discharge, termination and 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 as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Aircraft. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Trust Indenture 92 - 87 - Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of the Aircraft, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 450 West 33rd Street, 15th Floor, New York, New York 10001, Attention: Corporate Trust Department (telecopy: (212) 946-8160) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms Trust Indenture 93 - 88 - hereof or of any Equipment Note 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 permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section Trust Indenture 94 - 89 - 1110 of the Bankruptcy Code with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 95 IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By______________________________________ Title: THE CHASE MANHATTAN BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By______________________________________ Title: Trust Indenture 96 EXHIBIT A TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-12] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1989 BN-12] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and The Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to Manufacturers Hanover 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 any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS(1), the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated December 28, 1989, subjected to the Lien of such Original Indenture the airframe and engines therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on January 2, 1990 and assigned Conveyance No. V78636. WHEREAS(1), the Indenture relates to the 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. - -------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). 97 - 2 - WHEREAS(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [(3)] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. ---- ---------------- ---------------- NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: - -------- (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 98 - 3 - AIRFRAME(S) ( ) airframe(s) identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ---------------- -------------- together with all 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 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 security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1989 BN-12] No. 3 of even date herewith (other than Excepted Payments and Excepted Rights) covering the property described above. Form of Trust Indenture Supplement 99 - 4 - 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 100 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By____________________________ Title: Form of Trust Indenture Supplement 101 SCHEDULE I TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-12]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- ----------- --------- Series A $12,089,958 02-Jan-2009 6.85% Series B $ 4,533,177 02-Jan-2008 6.93% Series C $ 4,532,787 02-Jul-2004 6.86% Series D $ 1,711,069 02-Jan-98 8.16%
102 EQUIPMENT NOTES AMORTIZATION SERIES A Aircraft: N633AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 103 - 2 - SERIES B Aircraft: N633AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 104 - 3 - SERIES C Aircraft: N633AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 105 - 4 - SERIES D Aircraft: N633AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 106 SCHEDULE II TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-12] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. Schedule II EX-4.37 38 RESTATED TRUST INDENTURE [GPA 1990 AWA-13] 1 EXHIBIT 4.37 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-13] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 091 Registration No. N634AW Leased by America West Airlines, Inc. 2 TABLE OF CONTENTS
Page ---- GRANTING CLAUSE ....................................................... 3 HABENDUM CLAUSE ....................................................... 6 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions .................................... 8 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes ................................ 21 SECTION 2.02. Issuance and Terms of Equipment Notes .................. 26 SECTION 2.03. Payments from Trust Indenture Estate Only ................................................. 29 SECTION 2.04. Method of Payment ...................................... 31 SECTION 2.05. Application of Payments ................................ 33 SECTION 2.06. Termination of Interest in Trust Indenture Estate ..................................... 34 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes ...................................... 34 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes ...................................... 36 SECTION 2.09. Payment of Expenses on Transfer; Cancellation ......................................... 36 SECTION 2.10. Mandatory Redemptions of Equipment Notes ................................................ 37 SECTION 2.11. Redemptions; Notice of Redemption ...................... 37 SECTION 2.12. Option to Purchase Equipment Notes ..................... 38 SECTION 2.13. Subordination .......................................... 39 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions ............................. 40 SECTION 3.02. Event of Loss and Replacement .......................... 42 SECTION 3.03. Payment After Indenture Event of Default, etc ......................................... 43 SECTION 3.04. Certain Payments ....................................... 46 SECTION 3.05. Other Payments ......................................... 47 SECTION 3.06. Payments to Owner Trustee .............................. 47 SECTION 3.07. Investment of Amounts Held by Indenture Trustee ............................................. 48
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Page ---- ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee .............................................. 49 SECTION 4.02. Indenture Events of Default ............................ 50 SECTION 4.03. Certain Rights ......................................... 53 SECTION 4.04. Remedies ............................................... 55 SECTION 4.05. Return of the Aircraft, etc ............................ 58 SECTION 4.06. Remedies Cumulative .................................... 60 SECTION 4.07. Discontinuance of Proceedings .......................... 60 SECTION 4.08. Waiver of Past Indenture Defaults ...................... 61 SECTION 4.09. Exercise of Remedies by Foreign Note Holders .............................................. 61 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default ................... 61 SECTION 5.02. Action Upon Instructions ............................... 62 SECTION 5.03. Indemnification ........................................ 63 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions ............................ 64 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions ................. 64 SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts ........................ 64 SECTION 5.07. Indenture Supplements for Replacements ................. 68 SECTION 5.08. Effect of Replacement .................................. 68 SECTION 5.09. Notices, etc ........................................... 68 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant .................................... 69 SECTION 5.11. Evidence of Action Taken by Note Holder ................ 71 SECTION 5.12. Right of Revocation of Action Taken .................... 71 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties ........................ 72 SECTION 6.02. Absence of Duties ...................................... 73 SECTION 6.03. No Representations or Warranties as to Aircraft or Documents ................................ 73 SECTION 6.04. No Segregation of Moneys; No Interest .................. 74
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Page ---- SECTION 6.05. Reliance; Agents; Advice of Counsel .................... 74 SECTION 6.06. Capacity in Which Acting ............................... 75 SECTION 6.07. Compensation ........................................... 75 SECTION 6.08. May Become Note Holder ................................. 75 SECTION 6.09. Further Assurances; Financing Statements ........................................... 75 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification ............................... 76 SECTION 7.02. Exculpation and Release of Liability ................... 77 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee ...................... 77 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor .................... 78 SECTION 8.03. Appointment of Separate Trustees ....................... 79 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures ........................................... 81 SECTION 9.02. Effect of Supplemental Indenture ....................... 84 SECTION 9.03. Documents to Be Given to Trustee ....................... 84 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures .............................. 85 SECTION 9.05. Trustees Protected ..................................... 85 SECTION 9.06. Documents Mailed to Note Holders ....................... 85 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement ................... 85 SECTION 9.08. Notices to Liquidity Provider .......................... 86 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture .............................. 86 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders .............................. 86 SECTION 10.03. Sale of Aircraft by Indenture Trustee
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Page ---- is Binding .......................................... 87 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders ............................. 87 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease ..................................... 87 SECTION 10.06. Notices ............................................... 87 SECTION 10.07. Severability .......................................... 88 SECTION 10.08. No Oral Modifications or Continuing Waivers ............................................. 88 SECTION 10.09. Successors and Assigns ................................ 88 SECTION 10.10. Headings .............................................. 88 SECTION 10.11. Normal Commercial Relations ........................... 89 SECTION 10.12. Governing Law; Counterpart Form ....................... 89 SECTION 10.13. Section 1110 .......................................... 89
EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements (iv) 6 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-13] FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-13] (this "First Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). WITNESSETH: WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-13] No. 1 dated September 28, 1990, and as further supplemented by Trust Agreement Supplement [GPA 1990 AWA-13] No. 2 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, which were recorded by the Federal Aviation Administration on October 1, 1990 as one instrument and assigned Conveyance No. E10187, as amended by Amendment No. 1 dated March 27, 1992, Trust Indenture 7 - 2 - recorded by the Federal Aviation Administration on May 18, 1992 and assigned Conveyance No. EE003014, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59673 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as supplemented by Lease Supplement [GPA 1990 AWA-13] No. 1 dated September 28, 1990, which were recorded by the Federal Aviation Administration on October 1, 1990 as one instrument and assigned Conveyance No. E10188, and as further supplemented by Lease Supplement No. 2 dated December 31, 1991, which was not filed for recordation with the Federal Aviation Administration (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-13] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Original Loan Certificates issued pursuant to the Original Indenture shall be prepaid and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this First Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts Trust Indenture 8 - 3 - received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this First Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments and Excepted Rights (which collectively, excluding Excepted Payments and Excepted Rights but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Trust Indenture 9 - 4 - Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment, with the Consents and Agreements attached thereto; and the Bills of Sale; in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Aircraft or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer, the Manufacturer's Subsidiary or any other Person in respect of any determination of invalidity of any such document; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval Trust Indenture 10 - 5 - under or with respect of any thereof or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or otherwise, arising out of any default under any Assigned Sublease; (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Owner Trustee in and to the same and every part thereof; (5) all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii) payment in amounts which have been distributed to the Owner Trustee or any other Person in accordance with the provisions of this Agreement, AND SUBJECT TO Sections 2.03, 5.10 and 9.01 hereof. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel Trust Indenture 11 - 6 - paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto, and the original Warranty Bill of Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the chattel paper original executed Lease Supplement No. 2. Concurrently with the delivery of this Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper original executed counterparts of the Amended and Restated Lease and Lease Supplement No. 3. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, with full power (in the name of the Owner Trustee or Trust Indenture 12 - 7 - otherwise) to ask, require, demand, receive and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments and Excepted Rights) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Under the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such Trust Indenture 13 - 8 - estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments and Excepted Rights. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments (including all annexes, appendices, exhibits, schedules and supplements thereto) as the Trust Indenture 14 - 9 - same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended. "Bills of Sale" means the FAA Bills of Sale and the Warranty Bill of Sale. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities Trust Indenture 15 - 10 - pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer included in the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C, Series D and Series E, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means September 28, 1990. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term Trust Indenture 16 - 11 - unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) any and all indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document) or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to the Lease (including, without limitation, Section 13 thereof and any corresponding payment of Supplemental Rent under the Lease), (ii) any proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Aircraft by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document), or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Trust Indenture 17 - 12 - Guarantor under the Tax Indemnification Agreement or the Amended and Restated Head Lease TIA (as defined in the Refunding Agreement), as the case may be, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Lease, (vii) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate (or a portion thereof), (viii) any amount payable to the Owner Trustee, the Trust Company or the Owner Participant or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders attributable to the period prior to or on the Restatement Date or under the Original Participation Agreement, the Original Lease, the Parent Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the Amended and Restated Sublease TIA (as such terms are defined in the Refunding Agreement) or Retained Head Lease Rights and Obligations (as such term is defined in the Refunding Agreement), and (ix) subject to the last sentence of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner Participant or the Trust Company under the Operative Documents, whether or not a Lease Event of Default, a Lease Default, an Indenture Default or an Indenture Trustee Event has occurred and is continuing to demand, collect, sue for, give notices, make determinations, enforce or exercise all rights with respect to and otherwise obtain all amounts described in clauses (i) through (viii) above and the proceeds thereof. "Excepted Rights" means (i) those rights of the Owner Participant and the Owner Trustee under Section 5.10 of this Indenture, (ii) all rights under the Equity Collateral to make a claim for, collect and retain all amounts payable with respect to any Equity Collateral, (iii) all rights of the Owner Participant, the Trust Company or the Owner Trustee to compromise or waive any such right or modify, amend or waive any provision of any Operative Document conferring such rights with respect to Excepted Payments, and (iv) all rights of the Owner Trustee to exercise any election or option, or to make any decision or determina- Trust Indenture 18 - 13 - tion, or to give or receive any notice, consent, waiver or approval with respect to Excepted Payments. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this First Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto; and the Bills of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Trust Indenture 19 - 14 - "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Aircraft and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated September 28, 1990, which was recorded as one instrument by the FAA with the Original Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this First Amended and Restated Indenture. "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as assigned, amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-13] dated as of the date hereof and Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of the date hereof and supplemented by Lease Supplement [GPA 1990 AWA-13] No. 3 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Amended and Trust Indenture 20 - 15 - Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Series C Equipment Notes, Series D Equipment Notes and Series E Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation between the most recent weekly average yield to maturity for Trust Indenture 21 - 16 - two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease. "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1990 AWA-13] dated as of September Trust Indenture 22 - 17 - 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, which were recorded as one instrument by the FAA on October 1, 1990 and assigned Conveyance No. E10187, as amended by Amendment No. 1 dated March 27, 1992, recorded by the FAA on May 18, 1992 and assigned Conveyance No. EE003014, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on August 4, 1993 and assigned Conveyance No. F59673. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Aircraft Sublease Agreement [GPA 1990 AWA-13] dated as of September 21, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means _______________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the five Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the five separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. Trust Indenture 23 - 18 - "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Assignment" means the Purchase Agreement Assignment [GPA 1990 AWA-13], dated as of the Delivery Date, between the Parent Guarantor and the Original Head Lessee, together with the Consents and Agreements attached thereto, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof and thereof. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1990 AWA-13], dated as of the Delivery Date, between the Original Head Lessee and the Owner Trustee together with the Consents and Agreements attached thereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1990 AWA-13] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. Trust Indenture 24 - 19 - "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 2. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Series E" or "Series E Equipment Notes" means Equipment Notes issued and designated as "Series E" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series E." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with Trust Indenture 25 - 20 - respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments and Excepted Rights. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Warranty Bill of Sale" means a full warranty (as to title) bill of sale covering the Aircraft (excluding all Buyer Furnished Equipment) executed by the Original Head Lessee in favor of the Owner Trustee dated the Delivery Date. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1990 AWA-13] DATED AS OF SEPTEMBER 21, 1990, AS AMENDED. SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N634AW. No.____________ Date: [________, 1996] $____________________ DEBT RATE MATURITY DATE [_________] [_______,___] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $_______ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing on January 2, 1997, and thereafter Trust Indenture 27 - 22 - on July 2 and January 2 of each year, to and including ____________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13], dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 28 - 23 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 29 - 24 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate - ----------------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. (4) To be inserted in the case of Series E Equipment Notes. Trust Indenture 30 - 25 - the subordination as provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](5) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. FLEET NATIONAL BANK, as Indenture Trustee By:_______________________________ Name: Title: - ----------------- (5) To be inserted in the case of a Series B, Series C, Series D or Series E Equipment Note. Trust Indenture 31 - 26 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in five separate series consisting of Series A, Series B, Series C, Series D and Series E and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Original Loan Certificates issued under the Original Indenture shall be concurrently prepaid. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 32 - 27 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 33 - 28 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" or "Series E Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of Trust Indenture 34 - 29 - individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Aircraft. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such Trust Indenture 35 - 30 - other agreements to the contrary notwithstanding (except for any express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Trust Indenture 36 - 31 - Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such Trust Indenture 37 - 32 - funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of Trust Indenture 38 - 33 - such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Trust Indenture 39 - 34 - Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request Trust Indenture 40 - 35 - from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Trust Indenture 41 - 36 - Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. Subject to compliance by the Note Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes within 10 Business Days of the date of the written request therefor from the Note Holder. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, Trust Indenture 42 - 37 - the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in Trust Indenture 43 - 38 - immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the Trust Indenture 44 - 39 - preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. Trust Indenture 45 - 40 - (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full, (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full and (iv) after the Secured Obligations in respect of Series C Equipment Notes have been paid in full, the Note Holders of Series D until the Secured Obligations in respect of Series D Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall Trust Indenture 46 - 41 - be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and (v) after giving effect to clause (iv) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series E Equipment Notes shall be distributed to the Note Holders of Series E ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series E Equipment Note bears to the aggregate amount of the payments then due under all Series E Equipment Notes; and Trust Indenture 47 - 42 - second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Airframe or the Airframe and one or both Engines as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Airframe or a Replacement Airframe and one or more Replacement Engines are to be substituted for the Airframe or the Airframe and one or both Engines subject to such Event of Loss as provided in Section 11 Trust Indenture 48 - 43 - of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections . (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Airframe or the Airframe and one or both Engines) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus any tax, Trust Indenture 49 - 44 - expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; Trust Indenture 50 - 45 - (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the Trust Indenture 51 - 46 - other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (v) after giving effect to paragraph (iv) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series E Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series E Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series E, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series E Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder and thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series E Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or Trust Indenture 52 - 47 - as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 notifies the Indenture Trustee that unless and until the Trust Indenture 53 - 48 - Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section ; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section . Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Owner Trustee or, in the event the Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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. Trust Indenture 54 - 49 - ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; Trust Indenture 55 - 50 - (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; 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 the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Trust Indenture 56 - 51 - Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant with responsibility for or familiarity with the transactions contemplated hereunder and under the other Operative Documents (or any Vice President) shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person (if any), as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to Trust Indenture 57 - 52 - observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure, in any case and either individually or together with other then existing failures, shall have a material adverse effect on the rights and interests of the Indenture Trustee or any Note Holder and is not remedied within a period of 45 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 Trust Indenture 58 - 53 - 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Aircraft shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the second day after the expiry of the applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the second day after the expiry of any applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. Solely for the purpose of determining whether there exists an Indenture Event of Default, (a) any timely payment by Trust Indenture 59 - 54 - 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee or by demanding Excepted Payments or Excepted Rights; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease (after giving effect to any applicable grace period) as to (i) each Trust Indenture 60 - 55 - of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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, and if the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Aircraft, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial Trust Indenture 61 - 56 - exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of Trust Indenture 62 - 57 - the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Trust Indenture 63 - 58 - covenant or provision of this Indenture shall have been cured, then and in every such case a Majority in Interest of Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. No Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof and unless the Owner Participant shall have theretofore purchased the Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall have occurred and be continuing and the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, 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 designated by the Indenture Trustee, at such time or times and place or places as the Trust Indenture 64 - 59 - Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Trust Indenture 65 - 60 - Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, 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 Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, Trust Indenture 66 - 61 - be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time when (i) the Aircraft is registered with the Federal Aviation Administration, (ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes is held by one or more Persons which are not a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV as a result of the occurrence of an Indenture Event of Default which is not a Lease Event of Default, the Indenture Trustee shall make arrangements, if any, as may be required by law so that such exercise of remedies shall not result in the ineligibility of the Aircraft to be registered under the Federal Aviation Act. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), Trust Indenture 67 - 62 - and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Aircraft or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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, Trust Indenture 68 - 63 - or give such notice, consent, waiver or approval or exercise such right, remedy or power to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 Trust Indenture 69 - 64 - first sentence thereof) or 5.02 or Article IV hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Aircraft or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. Trust Indenture 70 - 65 - SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts. (a) If at any time and from time to time, the Airframe or Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a), 11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s), as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine(s) 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Airframe and/or Engine(s) so to be released and the Replacement Airframe and/or Replacement Engine(s). (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number; (ii) a description of the Replacement Airframe (including the manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number) to be received as consideration for the Airframe to be released; (iii) that on the date of the Indenture Supplement relating to the Replacement Airframe the Owner Trustee will hold legal title to such Replacement Airframe free and clear of all Liens except Permitted Liens, that such Replacement Airframe will on such date be in good operating condition, and that such Replacement Airframe has been or, substantially concurrently with such replacement, is in the process of being duly registered with the Owner Trustee as owner thereof under the Federal Aviation Act or under the law then applicable to the registration of the Aircraft and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such Trust Indenture 71 - 66 - registration and certificate is in full force and effect, and the Lessee or a Permitted Sublessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Section 12 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of a like Airbus A320-231 model airframe with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988; (vi) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (vii) an appraisal prepared in accordance with the Appraisal Procedure (as defined in the Lease) confirms that the Replacement Airframe has a value, utility and remaining useful life at least equal to that of the Airframe which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of the Lease whether or not they are in fact so maintained; and (viii) that each of the conditions specified in Section 11(a) and (c) of the Lease with respect to such Replacement Airframe have been satisfied. B. With respect to the replacement of any Engine: (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 hold title to such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that such Replacement Engine is the same or an improved model as the Engine to be released; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be Trust Indenture 72 - 67 - less than the then value, remaining useful life and utility of the Engine requested to be released, assuming such Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of 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; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to such Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) With respect to a Replacement Airframe, an appraisal from BK Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of independent aircraft appraisers satisfactory to the Indenture Trustee confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof. (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Airframe and/or Replacement Engine(s) have been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and the Lease, and subjecting Trust Indenture 73 - 68 - to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and/or Replacement Engine and the Lien of this Indenture on such Replacement Airframe and/or Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Airframe and, if an Event of Loss with respect to the Aircraft has occurred, the Replacement Engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Airframe and/or Engine(s) being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Airframe or Engine as Trust Indenture 74 - 69 - contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Airframe or Engine(s) being replaced shall be applicable to such Replacement Airframe or Replacement Engine(s) with the same force and effect as if such Replacement Airframe or Replacement Engine(s) were the same airframe or engine(s), as the case may be, as the Airframe or Engine(s) being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable Trust Indenture 75 - 70 - provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Aircraft; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) (i) the Indenture Trustee shall not, without the consent of the Owner Trustee, enter into, execute and deliver amendments or modifications in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment and (ii) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (A) enter into, execute and deliver waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee all notices, certificates, reports, filings, opinions of counsel and other documents Trust Indenture 76 - 71 - and all information which any thereof is permitted or required to give or furnish to the Owner Trustee pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Trust Indenture 77 - 72 - Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee in its individual capacity shall be answerable or accountable under any circumstances, except for its own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, Trust Indenture 78 - 73 - from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the 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 on the Aircraft, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Aircraft. SECTION 6.03. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT Trust Indenture 79 - 74 - DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Aircraft the Owner Trustee shall have received whatever interest in the Aircraft was conveyed to it under the Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to the Lessee the manner of Trust Indenture 80 - 75 - 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third sentence of Section 2.04(a)) through agents or attorneys and shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. Trust Indenture 81 - 76 - SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 and as trustee) from and after the Restatement Date (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 Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, Trust Indenture 82 - 77 - acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants, thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Trust Indenture 83 - 78 - Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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 and Trust Indenture 84 - 79 - assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and shall also be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of Trust Indenture 85 - 80 - the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be Trust Indenture 86 - 81 - conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate 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. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or Trust Indenture 87 - 82 - supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any material respect and (iii) the Lessee may effect the re-registration of the Aircraft in accordance with but always subject to the terms and conditions applicable thereto specified in Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Trust Indenture 88 - 83 - Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Trust Indenture 89 - 84 - Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective Trust Indenture 90 - 85 - rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of Trust Indenture 91 - 86 - all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Aircraft, any Engines or other property thereto or to release the Aircraft, any Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Aircraft and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and 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 as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part Trust Indenture 92 - 87 - of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Aircraft. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of the Aircraft, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, Trust Indenture 93 - 88 - directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex: 99339; answerback: CTNB- HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Trust Indenture 94 - 89 - 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. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 95 IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By_________________________________ Title: FLEET NATIONAL BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By_________________________________ Title: Trust Indenture 96 EXHIBIT A TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-13] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1990 AWA-13] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. WITNESSETH: WHEREAS, the Trust Indenture and Security Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), 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 any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July 29, 1993, subjected to the Lien of such Original Indenture the airframe and engines therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on October 1, 1990 and assigned Conveyance No. E10187, which Amendment No. 1 has been duly recorded with the Federal Aviation Administration on May 18, 1992 and assigned Conveyance No. EE003014 and which Amendment No. 2 has been duly recorded with the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59673. 97 - 2 - WHEREAS(1), the Indenture relates to the 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee (3) Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and - ----------------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 98 - 3 - confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRFRAME(S) ( ) airframe(s) identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number together with all 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 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, Form of Trust Indenture Supplement 99 - 4 - sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1990 AWA-13] No. 3 of even date herewith (other than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 100 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By____________________________ Title: Form of Trust Indenture Supplement 101 SCHEDULE I TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-13]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- -------- --------- Series A $11,897,518 02-Jan-2009 6.85% Series B $ 4,413,774 02-Jul-2005 6.93% Series C $ 4,552,621 02-Jan-2002 6.86% Series D $ 4,249,113 02-Jan-2002 8.16% Series E $ 2,541,597 02-Jul-2002 10.50%
102 EQUIPMENT NOTES AMORTIZATION SERIES A Aircraft: N634AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 103 - 2 - SERIES B Aircraft: N634AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 104 - 3 - SERIES C Aircraft: N634AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 105 - 4 - SERIES D Aircraft: N634AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 106 - 5 - SERIES E Aircraft: N634AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 107 SCHEDULE II TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-13] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. Schedule II EX-4.38 39 RESTATED TRUST INDENTURE [GPA 1990 AWA-14] 1 EXHIBIT 4.38 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-14] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 092 Registration No. N635AW Leased by America West Airlines, Inc. 2 TABLE OF CONTENTS Page GRANTING CLAUSE................................................. 3 HABENDUM CLAUSE................................................. 6 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions.............................. 8 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes.......................... 21 SECTION 2.02. Issuance and Terms of Equipment Notes............ 26 SECTION 2.03. Payments from Trust Indenture Estate Only.............................. 29 SECTION 2.04. Method of Payment................................ 31 SECTION 2.05. Application of Payments.......................... 33 SECTION 2.06. Termination of Interest in Trust Indenture Estate.................. 34 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes................... 34 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes................... 36 SECTION 2.09. Payment of Expenses on Transfer; Cancellation...................... 36 SECTION 2.10. Mandatory Redemptions of Equipment Notes............................. 37 SECTION 2.11. Redemptions; Notice of Redemption................ 37 SECTION 2.12. Option to Purchase Equipment Notes............... 38 SECTION 2.13. Subordination.................................... 39 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions....................... 40 SECTION 3.02. Event of Loss and Replacement.................... 42 SECTION 3.03. Payment After Indenture Event of Default, etc...................... 43 SECTION 3.04. Certain Payments................................. 46 SECTION 3.05. Other Payments................................... 47 SECTION 3.06. Payments to Owner Trustee........................ 47 SECTION 3.07. Investment of Amounts Held by Indenture Trustee........................... 48 (i) 3
Page ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee.................................................................. 49 SECTION 4.02. Indenture Events of Default............................................................. 50 SECTION 4.03. Certain Rights.......................................................................... 53 SECTION 4.04. Remedies................................................................................ 55 SECTION 4.05. Return of the Aircraft, etc............................................................. 58 SECTION 4.06. Remedies Cumulative..................................................................... 60 SECTION 4.07. Discontinuance of Proceedings........................................................... 60 SECTION 4.08. Waiver of Past Indenture Defaults....................................................... 61 SECTION 4.09. Exercise of Remedies by Foreign Note Holders.................................................................. 61 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default.................................................... 61 SECTION 5.02. Action Upon Instructions................................................................ 62 SECTION 5.03. Indemnification......................................................................... 63 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions................................................ 64 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions..................................... 64 SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts............................................ 65 SECTION 5.07. Indenture Supplements for Replacements.................................................. 68 SECTION 5.08. Effect of Replacement................................................................... 68 SECTION 5.09. Notices, etc............................................................................ 69 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant........................................................ 69 SECTION 5.11. Evidence of Action Taken by Note Holder................................................. 71 SECTION 5.12. Right of Revocation of Action Taken..................................................... 72 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties......................................................... 72 SECTION 6.02. Absence of Duties....................................................................... 73 SECTION 6.03. No Representations or Warranties as to Aircraft or Documents.................................................... 73 SECTION 6.04. No Segregation of Moneys; No Interest................................................... 74
(ii) 4
Page SECTION 6.05. Reliance; Agents; Advice of Counsel..................................................... 74 SECTION 6.06. Capacity in Which Acting................................................................ 75 SECTION 6.07. Compensation............................................................................ 75 SECTION 6.08. May Become Note Holder.................................................................. 76 SECTION 6.09. Further Assurances; Financing Statements............................................................... 76 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification................................................................ 76 SECTION 7.02. Exculpation and Release of Liability.................................................... 77 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee....................................................... 78 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor........................................ 78 SECTION 8.03. Appointment of Separate Trustees........................................................ 79 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures............................................................... 81 SECTION 9.02. Effect of Supplemental Indenture........................................................ 84 SECTION 9.03. Documents to Be Given to Trustee........................................................ 85 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures.................................................. 85 SECTION 9.05. Trustees Protected...................................................................... 85 SECTION 9.06. Documents Mailed to Note Holders........................................................ 85 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement....................................... 86 SECTION 9.08. Notices to Liquidity Provider........................................................... 86 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture............................................................... 86 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders.................................................. 87 SECTION 10.03. Sale of Aircraft by Indenture Trustee
(iii) 5 is Binding.............................................................. 87 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders................................................. 87 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease......................................................... 87 SECTION 10.06. Notices................................................................................ 87 SECTION 10.07. Severability........................................................................... 88 SECTION 10.08. No Oral Modifications or Continuing Waivers................................................................. 88 SECTION 10.09. Successors and Assigns................................................................. 88 SECTION 10.10. Headings............................................................................... 89 SECTION 10.11. Normal Commercial Relations............................................................ 89 SECTION 10.12. Governing Law; Counterpart Form........................................................ 89 SECTION 10.13. Section 1110........................................................................... 89
EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements (iv) 6 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-14] FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-14] (this "First Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-14] No. 1 dated September 28, 1990, and as further supplemented by Trust Agreement Supplement [GPA 1990 AWA-14] No. 2 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, which were recorded by the Federal Aviation Administration on September 28, 1990 as one instrument and assigned Conveyance No. E10184, as amended by Amendment No. 1 dated March 27, 1992, Trust Indenture 7 - 2 - recorded by the Federal Aviation Administration on May 18, 1992 and assigned Conveyance No. EE003011, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59674 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as supplemented by Lease Supplement [GPA 1990 AWA-14] No. 1 dated September 28, 1990, which were recorded by the Federal Aviation Administration on September 28, 1990 as one instrument and assigned Conveyance No. E10185, and as further supplemented by Lease Supplement No. 2 dated December 31, 1991, which was not filed for recordation with the Federal Aviation Administration (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-14] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Original Loan Certificates issued pursuant to the Original Indenture shall be prepaid and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this First Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts Trust Indenture 8 - 3 - received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this First Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make- Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments and Excepted Rights (which collectively, excluding Excepted Payments and Excepted Rights but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Trust Indenture 9 - 4 - Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment, with the Consents and Agreements attached thereto; and the Bills of Sale; in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Aircraft or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer, the Manufacturer's Subsidiary or any other Person in respect of any determination of invalidity of any such document; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval Trust Indenture 10 - 5 - under or with respect of any thereof or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or otherwise, arising out of any default under any Assigned Sublease; (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Owner Trustee in and to the same and every part thereof; (5) all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii) payment in amounts which have been distributed to the Owner Trustee or any other Person in accordance with the provisions of this Agreement, AND SUBJECT TO Sections 2.03, 5.10 and 9.01 hereof. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel Trust Indenture 11 - 6 - paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto, and the original Warranty Bill of Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the chattel paper original executed Lease Supplement No. 2. Concurrently with the delivery of this Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper original executed counterparts of the Amended and Restated Lease and Lease Supplement No. 3. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, with full power (in the name of the Owner Trustee or Trust Indenture 12 - 7 - otherwise) to ask, require, demand, receive and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments and Excepted Rights) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Under the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such Trust Indenture 13 - 8 - estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments and Excepted Rights. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments (including all annexes, appendices, exhibits, schedules and supplements thereto) as the Trust Indenture 14 - 9 - same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Section 101 et seq., as amended. "Bills of Sale" means the FAA Bills of Sale and the Warranty Bill of Sale. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities Trust Indenture 15 - 10 - pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer included in the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C, Series D and Series E, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means September 28, 1990. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term Trust Indenture 16 - 11 - unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) any and all indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document) or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to the Lease (including, without limitation, Section 13 thereof and any corresponding payment of Supplemental Rent under the Lease), (ii) any proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Aircraft by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document), or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Trust Indenture 17 - 12 - Guarantor under the Tax Indemnification Agreement or the Amended and Restated Head Lease TIA (as defined in the Refunding Agreement), as the case may be, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Lease, (vii) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate (or a portion thereof), (viii) any amount payable to the Owner Trustee, the Trust Company or the Owner Participant or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders attributable to the period prior to or on the Restatement Date or under the Original Participation Agreement, the Original Lease, the Parent Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the Amended and Restated Sublease TIA (as such terms are defined in the Refunding Agreement) or Retained Head Lease Rights and Obligations (as such term is defined in the Refunding Agreement), and (ix) subject to the last sentence of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner Participant or the Trust Company under the Operative Documents, whether or not a Lease Event of Default, a Lease Default, an Indenture Default or an Indenture Trustee Event has occurred and is continuing to demand, collect, sue for, give notices, make determinations, enforce or exercise all rights with respect to and otherwise obtain all amounts described in clauses (i) through (viii) above and the proceeds thereof. "Excepted Rights" means (i) those rights of the Owner Participant and the Owner Trustee under Section 5.10 of this Indenture, (ii) all rights under the Equity Collateral to make a claim for, collect and retain all amounts payable with respect to any Equity Collateral, (iii) all rights of the Owner Participant, the Trust Company or the Owner Trustee to compromise or waive any such right or modify, amend or waive any provision of any Operative Document conferring such rights with respect to Excepted Payments, and (iv) all rights of the Owner Trustee to exercise any election or option, or to make any decision or determina- Trust Indenture 18 - 13 - tion, or to give or receive any notice, consent, waiver or approval with respect to Excepted Payments. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this First Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto; and the Bills of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Trust Indenture 19 - 14 - "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Aircraft and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated September 28, 1990, which was recorded as one instrument by the FAA with the Original Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this First Amended and Restated Indenture. "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as assigned, amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-14] dated as of the date hereof and Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of the date hereof and supplemented by Lease Supplement [GPA 1990 AWA-14] No. 3 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Amended and Trust Indenture 20 - 15 - Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Series C Equipment Notes, Series D Equipment Notes and Series E Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation between the most recent weekly average yield to maturity for two series Trust Indenture 21 - 16 - of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease. Trust Indenture 22 - 17 - "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, which were recorded as one instrument by the FAA on September 28, 1990 and assigned Conveyance No. E10184, as amended by Amendment No. 1 dated March 27, 1992, recorded by the FAA on May 18, 1992 and assigned Conveyance No. EE003011, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on August 4, 1993 and assigned Conveyance No. F59674. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Aircraft Sublease Agreement [GPA 1990 AWA-14] dated as of September 21, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means _____________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the five Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the five separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Trust Indenture 23 - 18 - Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Assignment" means the Purchase Agreement Assignment [GPA 1990 AWA-14], dated as of the Delivery Date, between the Parent Guarantor and the Original Head Lessee, together with the Consents and Agreements attached thereto, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof and thereof. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1990 AWA-14], dated as of the Delivery Date, between the Original Head Lessee and the Owner Trustee together with the Consents and Agreements attached thereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1990 AWA-14] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. Trust Indenture 24 - 19 - "Registrar" has the meaning set forth in Section 2.07 hereof. "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 2. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Series E" or "Series E Equipment Notes" means Equipment Notes issued and designated as "Series E" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series E." Trust Indenture 25 - 20 - "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments and Excepted Rights. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Warranty Bill of Sale" means a full warranty (as to title) bill of sale covering the Aircraft (excluding all Buyer Furnished Equipment) executed by the Original Head Lessee in favor of the Owner Trustee dated the Delivery Date. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1990 AWA-14] DATED AS OF SEPTEMBER 21, 1990, AS AMENDED. SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N635AW. No.____________ Date: [________, 1996] $___________________ DEBT RATE MATURITY DATE [ ] [ , ] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $_______ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing on January 2, 1997, and thereafter Trust Indenture 27 - 22 - on July 2 and January 2 of each year, to and including ___________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-14], dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 28 - 23 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 29 - 24 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate - -------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. (4) To be inserted in the case of Series E Equipment Notes. Trust Indenture 30 - 25 - the subordination as provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](5) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. FLEET NATIONAL BANK, as Indenture Trustee By:__________________________ Name: Title: ________________ (5) To be inserted in the case of a Series B, Series C, Series D or Series E Equipment Note. Trust Indenture 31 - 26 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in five separate series consisting of Series A, Series B, Series C, Series D and Series E and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Original Loan Certificates issued under the Original Indenture shall be concurrently prepaid. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 32 - 27 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 33 - 28 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" or "Series E Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of Trust Indenture 34 - 29 - individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Aircraft. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such Trust Indenture 35 - 30 - other agreements to the contrary notwithstanding (except for any express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Trust Indenture 36 - 31 - Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such Trust Indenture 37 - 32 - funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of Trust Indenture 38 - 33 - such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Trust Indenture 39 - 34 - Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request Trust Indenture 40 - 35 - from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Trust Indenture 41 - 36 - Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. Subject to compliance by the Note Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes within 10 Business Days of the date of the written request therefor from the Note Holder. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, Trust Indenture 42 - 37 - the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in Trust Indenture 43 - 38 - immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the Trust Indenture 44 - 39 - preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. Trust Indenture 45 - 40 - (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full, (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full and (iv) after the Secured Obligations in respect of Series C Equipment Notes have been paid in full, the Note Holders of Series D until the Secured Obligations in respect of Series D Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall Trust Indenture 46 - 41 - be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and (v) after giving effect to clause (iv) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series E Equipment Notes shall be distributed to the Note Holders of Series E ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series E Equipment Note bears to the aggregate amount of the payments then due under all Series E Equipment Notes; and Trust Indenture 47 - 42 - second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Airframe or the Airframe and one or both Engines as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Airframe or a Replacement Airframe and one or more Replacement Engines are to be substituted for the Airframe or the Airframe and one or both Engines subject to such Event of Loss as provided in Section 11 Trust Indenture 48 - 43 - of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections. (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Airframe or the Airframe and one or both Engines) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus any tax, Trust Indenture 49 - 44 - expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; Trust Indenture 50 - 45 - (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the Trust Indenture 51 - 46 - other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (v) after giving effect to paragraph (iv) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series E Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series E Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series E, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series E Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder and thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series E Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or Trust Indenture 52 - 47 - as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 notifies the Indenture Trustee that unless and until the Trust Indenture 53 - 48 - Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section. Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Owner Trustee or, in the event the Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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. Trust Indenture 54 - 49 - ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; Trust Indenture 55 - 50 - (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; 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 the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Trust Indenture 56 - 51 - Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant with responsibility for or familiarity with the transactions contemplated hereunder and under the other Operative Documents (or any Vice President) shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person (if any), as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to Trust Indenture 57 - 52 - observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure, in any case and either individually or together with other then existing failures, shall have a material adverse effect on the rights and interests of the Indenture Trustee or any Note Holder and is not remedied within a period of 45 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 Trust Indenture 58 - 53 - 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Aircraft shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the second day after the expiry of the applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the second day after the expiry of any applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. Solely for the purpose of determining whether there exists an Indenture Event of Default, (a) any timely payment by Trust Indenture 59 - 54 - 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee or by demanding Excepted Payments or Excepted Rights; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease (after giving effect to any applicable grace period) as to (i) each Trust Indenture 60 - 55 - of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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, and if the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Aircraft, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial Trust Indenture 61 - 56 - exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of Trust Indenture 62 - 57 - the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Trust Indenture 63 - 58 - covenant or provision of this Indenture shall have been cured, then and in every such case a Majority in Interest of Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. No Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof and unless the Owner Participant shall have theretofore purchased the Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall have occurred and be continuing and the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, 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 designated by the Indenture Trustee, at such time or times and place or places as the Trust Indenture 64 - 59 - Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Trust Indenture 65 - 60 - Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, 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 Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, Trust Indenture 66 - 61 - be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time when (i) the Aircraft is registered with the Federal Aviation Administration, (ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes is held by one or more Persons which are not a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV as a result of the occurrence of an Indenture Event of Default which is not a Lease Event of Default, the Indenture Trustee shall make arrangements, if any, as may be required by law so that such exercise of remedies shall not result in the ineligibility of the Aircraft to be registered under the Federal Aviation Act. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), Trust Indenture 67 - 62 - and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Aircraft or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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, Trust Indenture 68 - 63 - or give such notice, consent, waiver or approval or exercise such right, remedy or power to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 Trust Indenture 69 - 64 - first sentence thereof) or 5.02 or Article IV hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Aircraft or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. Trust Indenture 70 - 65 - SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts. (a) If at any time and from time to time, the Airframe or Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a), 11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s), as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine(s) 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Airframe and/or Engine(s) so to be released and the Replacement Airframe and/or Replacement Engine(s). (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number; (ii) a description of the Replacement Airframe (including the manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number) to be received as consideration for the Airframe to be released; (iii) that on the date of the Indenture Supplement relating to the Replacement Airframe the Owner Trustee will hold legal title to such Replacement Airframe free and clear of all Liens except Permitted Liens, that such Replacement Airframe will on such date be in good operating condition, and that such Replacement Airframe has been or, substantially concurrently with such replacement, is in the process of being duly registered with the Owner Trustee as owner thereof under the Federal Aviation Act or under the law then applicable to the registration of the Aircraft and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such Trust Indenture 71 - 66 - registration and certificate is in full force and effect, and the Lessee or a Permitted Sublessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Section 12 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of a like Airbus A320-231 model airframe with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988; (vi) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (vii) an appraisal prepared in accordance with the Appraisal Procedure (as defined in the Lease) confirms that the Replacement Airframe has a value, utility and remaining useful life at least equal to that of the Airframe which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of the Lease whether or not they are in fact so maintained; and (viii) that each of the conditions specified in Section 11(a) and (c) of the Lease with respect to such Replacement Airframe have been satisfied. B. With respect to the replacement of any Engine: (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 hold title to such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that such Replacement Engine is the same or an improved model as the Engine to be released; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be Trust Indenture 72 - 67 - less than the then value, remaining useful life and utility of the Engine requested to be released, assuming such Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of 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; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to such Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) With respect to a Replacement Airframe, an appraisal from BK Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of independent aircraft appraisers satisfactory to the Indenture Trustee confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof. (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Airframe and/or Replacement Engine(s) have been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and the Lease, and subjecting Trust Indenture 73 - 68 - to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and/or Replacement Engine and the Lien of this Indenture on such Replacement Airframe and/or Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Airframe and, if an Event of Loss with respect to the Aircraft has occurred, the Replacement Engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Airframe and/or Engine(s) being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Airframe or Engine as Trust Indenture 74 - 69 - contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Airframe or Engine(s) being replaced shall be applicable to such Replacement Airframe or Replacement Engine(s) with the same force and effect as if such Replacement Airframe or Replacement Engine(s) were the same airframe or engine(s), as the case may be, as the Airframe or Engine(s) being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable Trust Indenture 75 - 70 - provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Aircraft; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) (i) the Indenture Trustee shall not, without the consent of the Owner Trustee, enter into, execute and deliver amendments or modifications in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment and (ii) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (A) enter into, execute and deliver waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee all notices, certificates, reports, filings, opinions of counsel and other documents Trust Indenture 76 - 71 - and all information which any thereof is permitted or required to give or furnish to the Owner Trustee pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Trust Indenture 77 - 72 - Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee in its individual capacity shall be answerable or accountable under any circumstances, except for its own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, Trust Indenture 78 - 73 - from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the 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 on the Aircraft, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Aircraft. SECTION 6.03. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT Trust Indenture 79 - 74 - DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Aircraft the Owner Trustee shall have received whatever interest in the Aircraft was conveyed to it under the Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to the Lessee the manner of Trust Indenture 80 - 75 - 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third sentence of Section 2.04(a)) through agents or attorneys and shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. Trust Indenture 81 - 76 - SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 and as trustee) from and after the Restatement Date (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 Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, Trust Indenture 82 - 77 - acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants, thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Trust Indenture 83 - 78 - Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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 and Trust Indenture 84 - 79 - assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and shall also be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of Trust Indenture 85 - 80 - the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be Trust Indenture 86 - 81 - conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate 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. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or Trust Indenture 87 - 82 - supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any material respect and (iii) the Lessee may effect the re-registration of the Aircraft in accordance with but always subject to the terms and conditions applicable thereto specified in Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Trust Indenture 88 - 83 - Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Trust Indenture 89 - 84 - Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective Trust Indenture 90 - 85 - rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of Trust Indenture 91 - 86 - all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Aircraft, any Engines or other property thereto or to release the Aircraft, any Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Aircraft and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and 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 as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part Trust Indenture 92 - 87 - of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Aircraft. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of the Aircraft, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, Trust Indenture 93 - 88 - directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex: 99339; answerback: CTNB-HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Trust Indenture 94 - 89 - 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. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 95 IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By ------------------------------- Title: FLEET NATIONAL BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By ------------------------------- Title: Trust Indenture 96 EXHIBIT A TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-14] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1990 AWA-14] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), 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 any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July 29, 1993, subjected to the Lien of such Original Indenture the airframe and engines therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on September 28, 1990 and assigned Conveyance No. E10184, which Amendment No. 1 has been duly recorded with the Federal Aviation Administration on May 18, 1992 and assigned Conveyance No. EE003011 and which Amendment No. 2 has been duly recorded with the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59674. 97 - 2 - WHEREAS(1), the Indenture relates to the 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [(3)] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and - -------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 98 - 3 - confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRFRAME(S) ( ) airframe(s) identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number together with all 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 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, Form of Trust Indenture Supplement 99 - 4 - sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1990 AWA-14] No. 3 of even date herewith (other than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 100 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By____________________________ Title: Form of Trust Indenture Supplement 101 SCHEDULE I TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-14]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- -------- --------- Series A $11,897,518 02-Jan-2009 6.85% Series B $ 4,413,774 02-Jul-2005 6.93% Series C $ 4,552,621 02-Jan-2002 6.86% Series D $ 4,249,113 02-Jan-2002 8.16% Series E $ 2,541,597 02-Jul-2002 10.50%
102 EQUIPMENT NOTES AMORTIZATION SERIES A Aircraft: N635AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 103 - 2 - SERIES B Aircraft: N635AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 104 - 3 - SERIES C Aircraft: N635AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 105 - 4 - SERIES D Aircraft: N635AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 106 - 5 - SERIES E Aircraft: N635AW Principal Amount Percentage of Original Repayment Date Amount to be Paid 107 SCHEDULE II TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-14] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. Schedule II EX-4.39 40 RESTATED TRUST INDENTURE [GPA 1990 AWA-15] 1 EXHIBIT 4.39 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-15] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 098 Registration No. N636AW Leased by America West Airlines, Inc. 2 TABLE OF CONTENTS Page ---- GRANTING CLAUSE...................................................... 3 HABENDUM CLAUSE...................................................... 6 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions................................... 8 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes............................... 21 SECTION 2.02. Issuance and Terms of Equipment Notes................. 26 SECTION 2.03. Payments from Trust Indenture Estate Only............................................ 29 SECTION 2.04. Method of Payment..................................... 31 SECTION 2.05. Application of Payments............................... 33 SECTION 2.06. Termination of Interest in Trust Indenture Estate................................ 34 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes................................. 34 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes................................. 36 SECTION 2.09. Payment of Expenses on Transfer; Cancellation.................................... 36 SECTION 2.10. Mandatory Redemptions of Equipment Notes........................................... 37 SECTION 2.11. Redemptions; Notice of Redemption..................... 37 SECTION 2.12. Option to Purchase Equipment Notes.................... 38 SECTION 2.13. Subordination......................................... 39 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions............................ 40 SECTION 3.02. Event of Loss and Replacement......................... 42 SECTION 3.03. Payment After Indenture Event of Default, etc.................................... 43 SECTION 3.04. Certain Payments...................................... 46 SECTION 3.05. Other Payments........................................ 47 SECTION 3.06. Payments to Owner Trustee............................. 47 SECTION 3.07. Investment of Amounts Held by Indenture Trustee......................................... 48 (i) 3 Page ---- ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee......................................... 49 SECTION 4.02. Indenture Events of Default........................... 50 SECTION 4.03. Certain Rights........................................ 53 SECTION 4.04. Remedies.............................................. 55 SECTION 4.05. Return of the Aircraft, etc........................... 58 SECTION 4.06. Remedies Cumulative................................... 60 SECTION 4.07. Discontinuance of Proceedings......................... 60 SECTION 4.08. Waiver of Past Indenture Defaults..................... 61 SECTION 4.09. Exercise of Remedies by Foreign Note Holders......................................... 61 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default.................. 61 SECTION 5.02. Action Upon Instructions.............................. 62 SECTION 5.03. Indemnification....................................... 63 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions....................... 64 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions............ 64 SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts................... 64 SECTION 5.07. Indenture Supplements for Replacements................ 68 SECTION 5.08. Effect of Replacement................................. 68 SECTION 5.09. Notices, etc.......................................... 68 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant............................... 69 SECTION 5.11. Evidence of Action Taken by Note Holder............... 71 SECTION 5.12. Right of Revocation of Action Taken................... 71 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties....................... 72 SECTION 6.02. Absence of Duties..................................... 73 SECTION 6.03. No Representations or Warranties as to Aircraft or Documents........................... 73 SECTION 6.04. No Segregation of Moneys; No Interest................. 74 (ii) 4 Page ---- SECTION 6.05. Reliance; Agents; Advice of Counsel................... 74 SECTION 6.06. Capacity in Which Acting.............................. 75 SECTION 6.07. Compensation.......................................... 75 SECTION 6.08. May Become Note Holder................................ 75 SECTION 6.09. Further Assurances; Financing Statements...................................... 75 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification.............................. 76 SECTION 7.02. Exculpation and Release of Liability.................. 77 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee..................... 77 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor............... 78 SECTION 8.03. Appointment of Separate Trustees...................... 79 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures...................................... 81 SECTION 9.02. Effect of Supplemental Indenture...................... 84 SECTION 9.03. Documents to Be Given to Trustee...................... 84 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures......................... 85 SECTION 9.05. Trustees Protected.................................... 85 SECTION 9.06. Documents Mailed to Note Holders...................... 85 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement.............. 85 SECTION 9.08. Notices to Liquidity Provider......................... 86 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture............................. 86 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders......................... 86 SECTION 10.03. Sale of Aircraft by Indenture Trustee (iii) 5 Page ---- is Binding..................................... 87 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders........................ 87 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease................................ 87 SECTION 10.06. Notices.............................................. 87 SECTION 10.07. Severability......................................... 88 SECTION 10.08. No Oral Modifications or Continuing Waivers........................................ 88 SECTION 10.09. Successors and Assigns............................... 88 SECTION 10.10. Headings............................................. 88 SECTION 10.11. Normal Commercial Relations.......................... 89 SECTION 10.12. Governing Law; Counterpart Form...................... 89 SECTION 10.13. Section 1110......................................... 89 EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements (iv) 6 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-15] FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-15] (this "First Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-15] No. 1 dated September 28, 1990, and as further supplemented by Trust Agreement Supplement [GPA 1990 AWA-15] No. 2 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, which were recorded by the Federal Aviation Administration on September 28, 1990 as one instrument and assigned Conveyance No. L61291, as amended by Amendment No. 1 dated March 27, 1992, Trust Indenture 7 - 2 - recorded by the Federal Aviation Administration on May 18, 1992 and assigned Conveyance No. EE003013, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59675 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as supplemented by Lease Supplement [GPA 1990 AWA-15] No. 1 dated September 28, 1990, which were recorded by the Federal Aviation Administration on September 28, 1990 as one instrument and assigned Conveyance No. L61292, and as further supplemented by Lease Supplement No. 2 dated December 31, 1991, which was not filed for recordation with the Federal Aviation Administration (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-13] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Original Loan Certificates issued pursuant to the Original Indenture shall be prepaid and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this First Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts Trust Indenture 8 - 3 - received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this First Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments and Excepted Rights (which collectively, excluding Excepted Payments and Excepted Rights but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Trust Indenture 9 - 4 - Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment, with the Consents and Agreements attached thereto; and the Bills of Sale; in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Aircraft or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer, the Manufacturer's Subsidiary or any other Person in respect of any determination of invalidity of any such document; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval Trust Indenture 10 - 5 - under or with respect of any thereof or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or otherwise, arising out of any default under any Assigned Sublease; (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Owner Trustee in and to the same and every part thereof; (5) all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii) payment in amounts which have been distributed to the Owner Trustee or any other Person in accordance with the provisions of this Agreement, AND SUBJECT TO Sections 2.03, 5.10 and 9.01 hereof. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel Trust Indenture 11 - 6 - paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto, and the original Warranty Bill of Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the chattel paper original executed Lease Supplement No. 2. Concurrently with the delivery of this Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper original executed counterparts of the Amended and Restated Lease and Lease Supplement No. 3. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, with full power (in the name of the Owner Trustee or Trust Indenture 12 - 7 - otherwise) to ask, require, demand, receive and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments and Excepted Rights) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Under the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such Trust Indenture 13 - 8 - estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments and Excepted Rights. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments (including all annexes, appendices, exhibits, schedules and supplements thereto) as the Trust Indenture 14 - 9 - same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended. "Bills of Sale" means the FAA Bills of Sale and the Warranty Bill of Sale. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities Trust Indenture 15 - 10 - pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer included in the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C, Series D and Series E, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means September 28, 1990. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term Trust Indenture 16 - 11 - unsecured debt rating from each Rating Agency of at least A- 3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) any and all indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document) or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to the Lease (including, without limitation, Section 13 thereof and any corresponding payment of Supplemental Rent under the Lease), (ii) any proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Aircraft by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document), or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Trust Indenture 17 - 12 - Guarantor under the Tax Indemnification Agreement or the Amended and Restated Head Lease TIA (as defined in the Refunding Agreement), as the case may be, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Lease, (vii) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate (or a portion thereof), (viii) any amount payable to the Owner Trustee, the Trust Company or the Owner Participant or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders attributable to the period prior to or on the Restatement Date or under the Original Participation Agreement, the Original Lease, the Parent Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the Amended and Restated Sublease TIA (as such terms are defined in the Refunding Agreement) or Retained Head Lease Rights and Obligations (as such term is defined in the Refunding Agreement), and (ix) subject to the last sentence of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner Participant or the Trust Company under the Operative Documents, whether or not a Lease Event of Default, a Lease Default, an Indenture Default or an Indenture Trustee Event has occurred and is continuing to demand, collect, sue for, give notices, make determinations, enforce or exercise all rights with respect to and otherwise obtain all amounts described in clauses (i) through (viii) above and the proceeds thereof. "Excepted Rights" means (i) those rights of the Owner Participant and the Owner Trustee under Section 5.10 of this Indenture, (ii) all rights under the Equity Collateral to make a claim for, collect and retain all amounts payable with respect to any Equity Collateral, (iii) all rights of the Owner Participant, the Trust Company or the Owner Trustee to compromise or waive any such right or modify, amend or waive any provision of any Operative Document conferring such rights with respect to Excepted Payments, and (iv) all rights of the Owner Trustee to exercise any election or option, or to make any decision or Trust Indenture 18 - 13 - determination, or to give or receive any notice, consent, waiver or approval with respect to Excepted Payments. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this First Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto; and the Bills of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Trust Indenture 19 - 14 - "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Aircraft and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated September 28, 1990, which was recorded as one instrument by the FAA with the Original Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this First Amended and Restated Indenture. "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as assigned, amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-13] dated as of the date hereof and Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] dated as of the date hereof and supplemented by Lease Supplement [GPA 1990 AWA-15] No. 3 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Amended and Trust Indenture 20 - 15 - Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Series C Equipment Notes, Series D Equipment Notes and Series E Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation Trust Indenture 21 - 16 - between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease. Trust Indenture 22 - 17 - "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, which were recorded as one instrument by the FAA on September 28, 1990 and assigned Conveyance No. L61291, as amended by Amendment No. 1 dated March 27, 1992, recorded by the FAA on May 18, 1992 and assigned Conveyance No. EE003013, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on August 4, 1993 and assigned Conveyance No. F59675. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Aircraft Sublease Agreement [GPA 1990 AWA-15] dated as of September 21, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means _____________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the five Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the five separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Trust Indenture 23 - 18 - Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Assignment" means the Purchase Agreement Assignment [GPA 1990 AWA-15], dated as of the Delivery Date, between the Parent Guarantor and the Original Head Lessee, together with the Consents and Agreements attached thereto, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof and thereof. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1990 AWA-15], dated as of the Delivery Date, between the Original Head Lessee and the Owner Trustee together with the Consents and Agreements attached thereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1990 AWA-15] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. Trust Indenture 24 - 19 - "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 2. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Series E" or "Series E Equipment Notes" means Equipment Notes issued and designated as "Series E" hereunder, in the Principal Amount and maturities and Trust Indenture 25 - 20 - bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series E." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments and Excepted Rights. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Warranty Bill of Sale" means a full warranty (as to title) bill of sale covering the Aircraft (excluding all Buyer Furnished Equipment) executed by the Original Head Lessee in favor of the Owner Trustee dated the Delivery Date. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1990 AWA-15] DATED AS OF SEPTEMBER 21, 1990, AS AMENDED. SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N636AW. No.____________ Date: [________, 1996] $___________________ DEBT RATE MATURITY DATE [ ] [ , ] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $_______ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semiannual installments commencing on January 2, 1997, and Trust Indenture 27 - 22 - thereafter on July 2 and January 2 of each year, to and including ___________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-15], dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 28 - 23 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 29 - 24 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate - -------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. (4) To be inserted in the case of Series E Equipment Notes. Trust Indenture 30 - 25 - the subordination as provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](5) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. FLEET NATIONAL BANK, as Indenture Trustee By:_______________________________ Name: Title: - -------- (5) To be inserted in the case of a Series B, Series C, Series D or Series E Equipment Note. Trust Indenture 31 - 26 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in five separate series consisting of Series A, Series B, Series C, Series D and Series E and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Original Loan Certificates issued under the Original Indenture shall be concurrently prepaid. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 32 - 27 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 33 - 28 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" or "Series E Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of Trust Indenture 34 - 29 - individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Aircraft. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such Trust Indenture 35 - 30 - other agreements to the contrary notwithstanding (except for any express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Trust Indenture 36 - 31 - Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such Trust Indenture 37 - 32 - funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of Trust Indenture 38 - 33 - such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Trust Indenture 39 - 34 - Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request Trust Indenture 40 - 35 - from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Trust Indenture 41 - 36 - Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. Subject to compliance by the Note Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes within 10 Business Days of the date of the written request therefor from the Note Holder. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, Trust Indenture 42 - 37 - the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in Trust Indenture 43 - 38 - immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the Trust Indenture 44 - 39 - preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. Trust Indenture 45 - 40 - (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full, (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full and (iv) after the Secured Obligations in respect of Series C Equipment Notes have been paid in full, the Note Holders of Series D until the Secured Obligations in respect of Series D Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall Trust Indenture 46 - 41 - be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and (v) after giving effect to clause (iv) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series E Equipment Notes shall be distributed to the Note Holders of Series E ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series E Equipment Note bears to the aggregate amount of the payments then due under all Series E Equipment Notes; and Trust Indenture 47 - 42 - second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Airframe or the Airframe and one or both Engines as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Airframe or a Replacement Airframe and one or more Replacement Engines are to be substituted for the Airframe or the Airframe and one or both Engines subject to such Event of Loss as provided in Section 11 Trust Indenture 48 - 43 - of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections . (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Airframe or the Airframe and one or both Engines) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus any tax, Trust Indenture 49 - 44 - expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; Trust Indenture 50 - 45 - (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the Trust Indenture 51 - 46 - other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (v) after giving effect to paragraph (iv) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series E Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series E Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series E, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series E Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder and thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series E Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or Trust Indenture 52 - 47 - as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 notifies the Indenture Trustee that unless and until the Trust Indenture 53 - 48 - Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section ; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section . Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Owner Trustee or, in the event the Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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. Trust Indenture 54 - 49 - ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; Trust Indenture 55 - 50 - (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; 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 the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Trust Indenture 56 - 51 - Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant with responsibility for or familiarity with the transactions contemplated hereunder and under the other Operative Documents (or any Vice President) shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person (if any), as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or Trust Indenture 57 - 52 - (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure, in any case and either individually or together with other then existing failures, shall have a material adverse effect on the rights and interests of the Indenture Trustee or any Note Holder and is not remedied within a period of 45 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its Trust Indenture 58 - 53 - 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Aircraft shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the second day after the expiry of the applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the second day after the expiry of any applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section Trust Indenture 59 - 54 - 21(d) of the Lease to perform such obligation on behalf of the Lessee. 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee or by demanding Excepted Payments or Excepted Rights; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Trust Indenture 60 - 55 - Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease (after giving effect to any applicable grace period) as to (i) each of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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, and if the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Aircraft, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them Trust Indenture 61 - 56 - or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails Trust Indenture 62 - 57 - to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes which by such declaration shall have become Trust Indenture 63 - 58 - 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 Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. No Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof and unless the Owner Participant shall have theretofore purchased the Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall have occurred and be continuing and the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, 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 Trust Indenture 64 - 59 - Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee Trust Indenture 65 - 60 - hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, 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 Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Trust Indenture 66 - 61 - Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time when (i) the Aircraft is registered with the Federal Aviation Administration, (ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes is held by one or more Persons which are not a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV as a result of the occurrence of an Indenture Event of Default which is not a Lease Event of Default, the Indenture Trustee shall make arrangements, if any, as may be required by law so that such exercise of remedies shall not result in the ineligibility of the Aircraft to be registered under the Federal Aviation Act. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Trust Indenture 67 - 62 - Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Aircraft or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note Holders, the Indenture Trustee shall take such of the following Trust Indenture 68 - 63 - 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 to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 Trust Indenture 69 - 64 - 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 hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Aircraft or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. Trust Indenture 70 - 65 - SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts. (a) If at any time and from time to time, the Airframe or Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a), 11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s), as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine(s) 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Airframe and/or Engine(s) so to be released and the Replacement Airframe and/or Replacement Engine(s). (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number; (ii) a description of the Replacement Airframe (including the manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number) to be received as consideration for the Airframe to be released; (iii) that on the date of the Indenture Supplement relating to the Replacement Airframe the Owner Trustee will hold legal title to such Replacement Airframe free and clear of all Liens except Permitted Liens, that such Replacement Airframe will on such date be in good operating condition, and that such Replacement Airframe has been or, substantially concurrently with such replacement, is in the process of being duly registered with the Owner Trustee as owner thereof under the Federal Aviation Act or under the law then applicable to the registration of the Aircraft and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such Trust Indenture 71 - 66 - registration and certificate is in full force and effect, and the Lessee or a Permitted Sublessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Section 12 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of a like Airbus A320-231 model airframe with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988; (vi) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (vii) an appraisal prepared in accordance with the Appraisal Procedure (as defined in the Lease) confirms that the Replacement Airframe has a value, utility and remaining useful life at least equal to that of the Airframe which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of the Lease whether or not they are in fact so maintained; and (viii) that each of the conditions specified in Section 11(a) and (c) of the Lease with respect to such Replacement Airframe have been satisfied. B. With respect to the replacement of any Engine: (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 hold title to such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that such Replacement Engine is the same or an improved model as the Engine to be released; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be Trust Indenture 72 - 67 - less than the then value, remaining useful life and utility of the Engine requested to be released, assuming such Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of 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; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to such Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) With respect to a Replacement Airframe, an appraisal from BK Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of independent aircraft appraisers satisfactory to the Indenture Trustee confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof. (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Airframe and/or Replacement Engine(s) have been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and the Lease, and subjecting Trust Indenture 73 - 68 - to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and/or Replacement Engine and the Lien of this Indenture on such Replacement Airframe and/or Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Airframe and, if an Event of Loss with respect to the Aircraft has occurred, the Replacement Engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Airframe and/or Engine(s) being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Airframe or Engine as Trust Indenture 74 - 69 - contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Airframe or Engine(s) being replaced shall be applicable to such Replacement Airframe or Replacement Engine(s) with the same force and effect as if such Replacement Airframe or Replacement Engine(s) were the same airframe or engine(s), as the case may be, as the Airframe or Engine(s) being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable Trust Indenture 75 - 70 - provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Aircraft; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) (i) the Indenture Trustee shall not, without the consent of the Owner Trustee, enter into, execute and deliver amendments or modifications in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment and (ii) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (A) enter into, execute and deliver waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee all notices, certificates, reports, filings, opinions of counsel and other documents Trust Indenture 76 - 71 - and all information which any thereof is permitted or required to give or furnish to the Owner Trustee pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Trust Indenture 77 - 72 - Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee in its individual capacity shall be answerable or accountable under any circumstances, except for its own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, Trust Indenture 78 - 73 - from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the 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 on the Aircraft, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Aircraft. SECTION 6.03. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT Trust Indenture 79 - 74 - DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Aircraft the Owner Trustee shall have received whatever interest in the Aircraft was conveyed to it under the Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to the Lessee the manner of Trust Indenture 80 - 75 - 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third sentence of Section 2.04(a)) through agents or attorneys and shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. Trust Indenture 81 - 76 - SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 and as trustee) from and after the Restatement Date (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 Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, Trust Indenture 82 - 77 - acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants, thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Trust Indenture 83 - 78 - Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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 and Trust Indenture 84 - 79 - assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and shall also be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of Trust Indenture 85 - 80 - the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be Trust Indenture 86 - 81 - conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate 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. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or Trust Indenture 87 - 82 - supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any material respect and (iii) the Lessee may effect the re-registration of the Aircraft in accordance with but always subject to the terms and conditions applicable thereto specified in Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Trust Indenture 88 - 83 - Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Trust Indenture 89 - 84 - Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective Trust Indenture 90 - 85 - rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of Trust Indenture 91 - 86 - all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Aircraft, any Engines or other property thereto or to release the Aircraft, any Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Aircraft and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and 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 as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part Trust Indenture 92 - 87 - of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Aircraft. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of the Aircraft, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, Trust Indenture 93 - 88 - directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex: 99339; answerback: CTNB-HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Trust Indenture 94 - 89 - 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. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 95 IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By______________________________________ Title: FLEET NATIONAL BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By______________________________________ Title: Trust Indenture 96 EXHIBIT A TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-15] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1990 AWA-15] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), 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 any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July 29, 1993, subjected to the Lien of such Original Indenture the airframe and engines therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on September 28, 1990 and assigned Conveyance No. L61291 which Amendment No. 1 has been duly recorded with the Federal Aviation Administration on May 18, 1992 and assigned Conveyance No. EE003013 and which Amendment No. 2 has been duly recorded with the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59675. 97 - 2 - WHEREAS(1), the Indenture relates to the 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [(3)] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. ---- ---------------- ---------------- NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and - -------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 98 - 3 - confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRFRAME(S) ( ) airframe(s) identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ---------------- -------------- together with all 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 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, Form of Trust Indenture Supplement 99 - 4 - sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1990 AWA-15] No. 3 of even date herewith (other than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 100 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By____________________________ Title: Form of Trust Indenture Supplement 101 SCHEDULE I TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-15]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- ----------- --------- Series A $11,897,518 02-Jan-2009 6.85% Series B $ 4,413,774 02-Jul-2005 6.93% Series C $ 4,552,621 02-Jan-2002 6.86% Series D $ 4,249,113 02-Jan-2002 8.16% Series E $ 2,541,597 02-Jul-2002 10.50%
102 EQUIPMENT NOTES AMORTIZATION SERIES A Aircraft: N636AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 103 - 2 - SERIES B Aircraft: N636AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 104 - 3 - SERIES C Aircraft: N636AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 105 - 4 - SERIES D Aircraft: N636AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 106 - 5 - SERIES E Aircraft: N636AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 107 SCHEDULE II TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-15] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. Schedule II EX-4.40 41 RESTATED TRUST INDENTURE [GPA 1990 AWA-16] 1 EXHIBIT 4.40 - -------------------------------------------------------------------------------- FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-16] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One Airbus A320-231 Aircraft Manufacturer's Serial No. 099 Registration No. N637AW Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
Page ---- GRANTING CLAUSE....................................................... 3 HABENDUM CLAUSE....................................................... 6 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions.................................... 8 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes................................ 21 SECTION 2.02. Issuance and Terms of Equipment Notes.................. 26 SECTION 2.03. Payments from Trust Indenture Estate Only................................................. 29 SECTION 2.04. Method of Payment...................................... 31 SECTION 2.05. Application of Payments................................ 33 SECTION 2.06. Termination of Interest in Trust Indenture Estate..................................... 34 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes...................................... 34 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes...................................... 36 SECTION 2.09. Payment of Expenses on Transfer; Cancellation......................................... 36 SECTION 2.10. Mandatory Redemptions of Equipment Notes................................................ 37 SECTION 2.11. Redemptions; Notice of Redemption...................... 37 SECTION 2.12. Option to Purchase Equipment Notes..................... 38 SECTION 2.13. Subordination.......................................... 39 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions............................. 40 SECTION 3.02. Event of Loss and Replacement.......................... 42 SECTION 3.03. Payment After Indenture Event of Default, etc......................................... 43 SECTION 3.04. Certain Payments....................................... 46 SECTION 3.05. Other Payments......................................... 47 SECTION 3.06. Payments to Owner Trustee.............................. 47 SECTION 3.07. Investment of Amounts Held by Indenture Trustee.............................................. 48
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Page ---- ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee.............................................. 49 SECTION 4.02. Indenture Events of Default............................ 50 SECTION 4.03. Certain Rights......................................... 53 SECTION 4.04. Remedies............................................... 55 SECTION 4.05. Return of the Aircraft, etc............................ 58 SECTION 4.06. Remedies Cumulative.................................... 60 SECTION 4.07. Discontinuance of Proceedings.......................... 60 SECTION 4.08. Waiver of Past Indenture Defaults...................... 61 SECTION 4.09. Exercise of Remedies by Foreign Note Holders.............................................. 61 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default................... 61 SECTION 5.02. Action Upon Instructions............................... 62 SECTION 5.03. Indemnification........................................ 63 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions............................ 64 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions................. 64 SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts........................ 64 SECTION 5.07. Indenture Supplements for Replacements................. 68 SECTION 5.08. Effect of Replacement.................................. 68 SECTION 5.09. Notices, etc........................................... 68 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant.................................... 69 SECTION 5.11. Evidence of Action Taken by Note Holder................ 71 SECTION 5.12. Right of Revocation of Action Taken.................... 71 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties........................ 72 SECTION 6.02. Absence of Duties...................................... 73 SECTION 6.03. No Representations or Warranties as to Aircraft or Documents................................ 73 SECTION 6.04. No Segregation of Moneys; No Interest.................. 74
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Page ---- SECTION 6.05. Reliance; Agents; Advice of Counsel.................... 74 SECTION 6.06. Capacity in Which Acting............................... 75 SECTION 6.07. Compensation........................................... 75 SECTION 6.08. May Become Note Holder................................. 75 SECTION 6.09. Further Assurances; Financing Statements........................................... 75 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification............................... 76 SECTION 7.02. Exculpation and Release of Liability................... 77 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee...................... 77 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor.................... 78 SECTION 8.03. Appointment of Separate Trustees....................... 79 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures........................................... 81 SECTION 9.02. Effect of Supplemental Indenture....................... 84 SECTION 9.03. Documents to Be Given to Trustee....................... 84 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures.............................. 85 SECTION 9.05. Trustees Protected..................................... 85 SECTION 9.06. Documents Mailed to Note Holders....................... 85 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement................... 85 SECTION 9.08. Notices to Liquidity Provider.......................... 86 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture.............................. 86 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders.............................. 86 SECTION 10.03. Sale of Aircraft by Indenture Trustee
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Page ---- is Binding........................................... 87 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders.............................. 87 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease...................................... 87 SECTION 10.06. Notices................................................ 87 SECTION 10.07. Severability........................................... 88 SECTION 10.08. No Oral Modifications or Continuing Waivers.............................................. 88 SECTION 10.09. Successors and Assigns................................. 88 SECTION 10.10. Headings............................................... 88 SECTION 10.11. Normal Commercial Relations............................ 89 SECTION 10.12. Governing Law; Counterpart Form........................ 89 SECTION 10.13. Section 1110........................................... 89
EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements (iv) 6 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-16] FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-16] (this "First Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-16] No. 1 dated September 28, 1990, and as further supplemented by Trust Agreement Supplement [GPA 1990 AWA-16] No. 2 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, which were recorded by the Federal Aviation Administration on September 28, 1990 as one instrument and assigned Conveyance No. P92334, as amended by Amendment No. 1 dated March 27, 1992, Trust Indenture 7 - 2 - recorded by the Federal Aviation Administration on May 18, 1992 and assigned Conveyance No. EE003012, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59676 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as supplemented by Lease Supplement [GPA 1990 AWA-16] No. 1 dated September 28, 1990, which were recorded by the Federal Aviation Administration on September 28, 1990 as one instrument and assigned Conveyance No. P92335, and as further supplemented by Lease Supplement No. 2 dated December 31, 1991, which was not filed for recordation with the Federal Aviation Administration (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-16] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Original Loan Certificates issued pursuant to the Original Indenture shall be prepaid and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this First Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts Trust Indenture 8 - 3 - received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this First Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, MakeWhole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments and Excepted Rights (which collectively, excluding Excepted Payments and Excepted Rights but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Trust Indenture 9 - 4 - Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment, with the Consents and Agreements attached thereto; and the Bills of Sale; in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Aircraft or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer, the Manufacturer's Subsidiary or any other Person in respect of any determination of invalidity of any such document; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval Trust Indenture 10 - 5 - under or with respect of any thereof or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or otherwise, arising out of any default under any Assigned Sublease; (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Owner Trustee in and to the same and every part thereof; (5) all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii) payment in amounts which have been distributed to the Owner Trustee or any other Person in accordance with the provisions of this Agreement, AND SUBJECT TO Sections 2.03, 5.10 and 9.01 hereof. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel Trust Indenture 11 - 6 - paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto, and the original Warranty Bill of Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the chattel paper original executed Lease Supplement No. 2. Concurrently with the delivery of this Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper original executed counterparts of the Amended and Restated Lease and Lease Supplement No. 3. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, with full power (in the name of the Owner Trustee or Trust Indenture 12 - 7 - otherwise) to ask, require, demand, receive and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments and Excepted Rights) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Under the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such Trust Indenture 13 - 8 - estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments and Excepted Rights. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments (including all annexes, appendices, exhibits, schedules and supplements thereto) as the Trust Indenture 14 - 9 - same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Section 101 et seq., as amended. "Bills of Sale" means the FAA Bills of Sale and the Warranty Bill of Sale. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities Trust Indenture 15 - 10 - pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer included in the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C, Series D and Series E, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means September 28, 1990. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term Trust Indenture 16 - 11 - unsecured debt rating from each Rating Agency of at least A- 3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) any and all indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document) or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to the Lease (including, without limitation, Section 13 thereof and any corresponding payment of Supplemental Rent under the Lease), (ii) any proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Aircraft by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document), or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Trust Indenture 17 - 12 - Guarantor under the Tax Indemnification Agreement or the Amended and Restated Head Lease TIA (as defined in the Refunding Agreement), as the case may be, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Lease, (vii) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate (or a portion thereof), (viii) any amount payable to the Owner Trustee, the Trust Company or the Owner Participant or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders attributable to the period prior to or on the Restatement Date or under the Original Participation Agreement, the Original Lease, the Parent Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the Amended and Restated Sublease TIA (as such terms are defined in the Refunding Agreement) or Retained Head Lease Rights and Obligations (as such term is defined in the Refunding Agreement), and (ix) subject to the last sentence of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner Participant or the Trust Company under the Operative Documents, whether or not a Lease Event of Default, a Lease Default, an Indenture Default or an Indenture Trustee Event has occurred and is continuing to demand, collect, sue for, give notices, make determinations, enforce or exercise all rights with respect to and otherwise obtain all amounts described in clauses (i) through (viii) above and the proceeds thereof. "Excepted Rights" means (i) those rights of the Owner Participant and the Owner Trustee under Section 5.10 of this Indenture, (ii) all rights under the Equity Collateral to make a claim for, collect and retain all amounts payable with respect to any Equity Collateral, (iii) all rights of the Owner Participant, the Trust Company or the Owner Trustee to compromise or waive any such right or modify, amend or waive any provision of any Operative Document conferring such rights with respect to Excepted Payments, and (iv) all rights of the Owner Trustee to exercise any election or option, or to make any decision or determina- Trust Indenture 18 - 13 - tion, or to give or receive any notice, consent, waiver or approval with respect to Excepted Payments. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this First Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement, including the Consent and Guaranty attached thereto (all to the extent assigned by the Purchase Agreement Assignment and the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto; and the Bills of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Trust Indenture 19 - 14 - "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Aircraft and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated September 28, 1990, which was recorded as one instrument by the FAA with the Original Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this First Amended and Restated Indenture. "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as assigned, amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-16] dated as of the date hereof and Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of the date hereof and supplemented by Lease Supplement [GPA 1990 AWA-16] No. 3 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Amended and Trust Indenture 20 - 15 - Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Series C Equipment Notes, Series D Equipment Notes and Series E Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation between the most recent weekly average yield to maturity for Trust Indenture 21 - 16 - two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease. "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1990 AWA-16] dated as of September Trust Indenture 22 - 17 - 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, which were recorded as one instrument by the FAA on September 28, 1990 and assigned Conveyance No. P92334, as amended by Amendment No. 1 dated March 27, 1992, recorded by the FAA on May 18, 1992 and assigned Conveyance No. EE003012, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on August 4, 1993 and assigned Conveyance No. F59676. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Aircraft Sublease Agreement [GPA 1990 AWA-16] dated as of September 21, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means ________________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the five Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the five separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. Trust Indenture 23 - 18 - "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Assignment" means the Purchase Agreement Assignment [GPA 1990 AWA-16], dated as of the Delivery Date, between the Parent Guarantor and the Original Head Lessee, together with the Consents and Agreements attached thereto, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof and thereof. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1990 AWA-16], dated as of the Delivery Date, between the Original Head Lessee and the Owner Trustee together with the Consents and Agreements attached thereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1990 AWA-16] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. Trust Indenture 24 - 19 - "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 2. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Series E" or "Series E Equipment Notes" means Equipment Notes issued and designated as "Series E" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series E." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with Trust Indenture 25 - 20 - respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments and Excepted Rights. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Warranty Bill of Sale" means a full warranty (as to title) bill of sale covering the Aircraft (excluding all Buyer Furnished Equipment) executed by the Original Head Lessee in favor of the Owner Trustee dated the Delivery Date. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1990 AWA-16] DATED AS OF SEPTEMBER 21, 1990, AS AMENDED. SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N637AW. No.____________ Date: [________, 1996] $___________________ DEBT RATE MATURITY DATE [_________] [_______,___] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $_______ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing on January 2, 1997, and thereafter Trust Indenture 27 - 22 - on July 2 and January 2 of each year, to and including ___________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the First Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-16], dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 28 - 23 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 29 - 24 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate - -------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. (4) To be inserted in the case of Series E Equipment Notes. Trust Indenture 30 - 25 - the subordination as provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]5 Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. FLEET NATIONAL BANK, as Indenture Trustee By:_______________________________ Name: Title: - -------- 5 To be inserted in the case of a Series B, Series C, Series D or Series E Equipment Note. Trust Indenture 31 - 26 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in five separate series consisting of Series A, Series B, Series C, Series D and Series E and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Original Loan Certificates issued under the Original Indenture shall be concurrently prepaid. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 32 - 27 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 33 - 28 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" or "Series E Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of Trust Indenture 34 - 29 - individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Aircraft. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such Trust Indenture 35 - 30 - other agreements to the contrary notwithstanding (except for any express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Trust Indenture 36 - 31 - Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such Trust Indenture 37 - 32 - funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of Trust Indenture 38 - 33 - such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Trust Indenture 39 - 34 - Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request Trust Indenture 40 - 35 - from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Trust Indenture 41 - 36 - Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. Subject to compliance by the Note Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes within 10 Business Days of the date of the written request therefor from the Note Holder. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, Trust Indenture 42 - 37 - the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in Trust Indenture 43 - 38 - immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the Trust Indenture 44 - 39 - preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. Trust Indenture 45 - 40 - (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full, (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full and (iv) after the Secured Obligations in respect of Series C Equipment Notes have been paid in full, the Note Holders of Series D until the Secured Obligations in respect of Series D Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall Trust Indenture 46 - 41 - be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and (v) after giving effect to clause (iv) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series E Equipment Notes shall be distributed to the Note Holders of Series E ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series E Equipment Note bears to the aggregate amount of the payments then due under all Series E Equipment Notes; and Trust Indenture 47 - 42 - second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Airframe or the Airframe and one or both Engines as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Airframe or a Replacement Airframe and one or more Replacement Engines are to be substituted for the Airframe or the Airframe and one or both Engines subject to such Event of Loss as provided in Section 11 Trust Indenture 48 - 43 - of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections. (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Airframe or the Airframe and one or both Engines) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus any tax, Trust Indenture 49 - 44 - expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; Trust Indenture 50 - 45 - (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the Trust Indenture 51 - 46 - other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (v) after giving effect to paragraph (iv) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series E Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series E Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series E, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series E Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder and thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series E Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or Trust Indenture 52 - 47 - as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 notifies the Indenture Trustee that unless and until the Trust Indenture 53 - 48 - Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section. Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Owner Trustee or, in the event the Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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. Trust Indenture 54 - 49 - ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; Trust Indenture 55 - 50 - (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; 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 the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Trust Indenture 56 - 51 - Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant with responsibility for or familiarity with the transactions contemplated hereunder and under the other Operative Documents (or any Vice President) shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person (if any), as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to Trust Indenture 57 - 52 - observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure, in any case and either individually or together with other then existing failures, shall have a material adverse effect on the rights and interests of the Indenture Trustee or any Note Holder and is not remedied within a period of 45 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 Trust Indenture 58 - 53 - 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Aircraft shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the second day after the expiry of the applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the second day after the expiry of any applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. Solely for the purpose of determining whether there exists an Indenture Event of Default, (a) any timely payment by Trust Indenture 59 - 54 - 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee or by demanding Excepted Payments or Excepted Rights; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease (after giving effect to any applicable grace period) as to (i) each Trust Indenture 60 - 55 - of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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, and if the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Aircraft, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial Trust Indenture 61 - 56 - exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of Trust Indenture 62 - 57 - the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Trust Indenture 63 - 58 - covenant or provision of this Indenture shall have been cured, then and in every such case a Majority in Interest of Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. No Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof and unless the Owner Participant shall have theretofore purchased the Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall have occurred and be continuing and the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, 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 designated by the Indenture Trustee, at such time or times and place or places as the Trust Indenture 64 - 59 - Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Trust Indenture 65 - 60 - Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, 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 Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, Trust Indenture 66 - 61 - be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time when (i) the Aircraft is registered with the Federal Aviation Administration, (ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes is held by one or more Persons which are not a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV as a result of the occurrence of an Indenture Event of Default which is not a Lease Event of Default, the Indenture Trustee shall make arrangements, if any, as may be required by law so that such exercise of remedies shall not result in the ineligibility of the Aircraft to be registered under the Federal Aviation Act. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), Trust Indenture 67 - 62 - and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Aircraft or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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, Trust Indenture 68 - 63 - or give such notice, consent, waiver or approval or exercise such right, remedy or power to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 Trust Indenture 69 - 64 - first sentence thereof) or 5.02 or Article IV hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Aircraft or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. Trust Indenture 70 - 65 - SECTION 5.06. Replacement Airframes, Replacement Engines and Replacement Parts. (a) If at any time and from time to time, the Airframe or Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a), 11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s), as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine(s) 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Airframe and/or Engine(s) so to be released and the Replacement Airframe and/or Replacement Engine(s). (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number; (ii) a description of the Replacement Airframe (including the manufacturer, model, FAA registration number (or other applicable registration number) and manufacturer's serial number) to be received as consideration for the Airframe to be released; (iii) that on the date of the Indenture Supplement relating to the Replacement Airframe the Owner Trustee will hold legal title to such Replacement Airframe free and clear of all Liens except Permitted Liens, that such Replacement Airframe will on such date be in good operating condition, and that such Replacement Airframe has been or, substantially concurrently with such replacement, is in the process of being duly registered with the Owner Trustee as owner thereof under the Federal Aviation Act or under the law then applicable to the registration of the Aircraft and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such Trust Indenture 71 - 66 - registration and certificate is in full force and effect, and the Lessee or a Permitted Sublessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Section 12 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of a like Airbus A320-231 model airframe with equivalent or better modification status delivered by the Manufacturer not earlier than June 30, 1988; (vi) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (vii) an appraisal prepared in accordance with the Appraisal Procedure (as defined in the Lease) confirms that the Replacement Airframe has a value, utility and remaining useful life at least equal to that of the Airframe which suffered the Event of Loss assuming that the same were maintained in accordance with the requirements of the Lease whether or not they are in fact so maintained; and (viii) that each of the conditions specified in Section 11(a) and (c) of the Lease with respect to such Replacement Airframe have been satisfied. B. With respect to the replacement of any Engine: (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 hold title to such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that such Replacement Engine is the same or an improved model as the Engine to be released; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be Trust Indenture 72 - 67 - less than the then value, remaining useful life and utility of the Engine requested to be released, assuming such Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of 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; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to such Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) With respect to a Replacement Airframe, an appraisal from BK Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of independent aircraft appraisers satisfactory to the Indenture Trustee confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof. (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Airframe and/or Replacement Engine(s) have been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lien of this Indenture and the Lease, and subjecting Trust Indenture 73 - 68 - to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the Aircraft is registered outside the United States, in the jurisdiction of registration, the legal title to such Replacement Airframe and/or Replacement Engine and the Lien of this Indenture on such Replacement Airframe and/or Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Airframe and, if an Event of Loss with respect to the Aircraft has occurred, the Replacement Engines to the same extent as with respect to the Airframe and Engines then installed thereon prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Airframe or Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Airframe and/or Engine(s) being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Airframe or Engine as Trust Indenture 74 - 69 - contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Airframe or Engine(s) being replaced shall be applicable to such Replacement Airframe or Replacement Engine(s) with the same force and effect as if such Replacement Airframe or Replacement Engine(s) were the same airframe or engine(s), as the case may be, as the Airframe or Engine(s) being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable Trust Indenture 75 - 70 - provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Aircraft; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) (i) the Indenture Trustee shall not, without the consent of the Owner Trustee, enter into, execute and deliver amendments or modifications in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment and (ii) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (A) enter into, execute and deliver waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee all notices, certificates, reports, filings, opinions of counsel and other documents Trust Indenture 76 - 71 - and all information which any thereof is permitted or required to give or furnish to the Owner Trustee pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Trust Indenture 77 - 72 - Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee in its individual capacity shall be answerable or accountable under any circumstances, except for its own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, Trust Indenture 78 - 73 - from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the 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 on the Aircraft, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Aircraft. SECTION 6.03. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT Trust Indenture 79 - 74 - DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Aircraft the Owner Trustee shall have received whatever interest in the Aircraft was conveyed to it under the Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to the Lessee the manner of Trust Indenture 80 - 75 - 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third sentence of Section 2.04(a)) through agents or attorneys and shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. Trust Indenture 81 - 76 - SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 and as trustee) from and after the Restatement Date (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 Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, Trust Indenture 82 - 77 - acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants, thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Trust Indenture 83 - 78 - Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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 and Trust Indenture 84 - 79 - assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Federal Aviation Act and shall also be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of Trust Indenture 85 - 80 - the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be Trust Indenture 86 - 81 - conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate 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. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or Trust Indenture 87 - 82 - supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any material respect and (iii) the Lessee may effect the re-registration of the Aircraft in accordance with but always subject to the terms and conditions applicable thereto specified in Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Trust Indenture 88 - 83 - Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Trust Indenture 89 - 84 - Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective Trust Indenture 90 - 85 - rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of Trust Indenture 91 - 86 - all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Aircraft, any Engines or other property thereto or to release the Aircraft, any Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Aircraft and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and 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 as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part Trust Indenture 92 - 87 - of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Aircraft. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of the Aircraft, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, Trust Indenture 93 - 88 - directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex: 99339; answerback: CTNBHTFD; telecopy: (203) 240-7920) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Trust Indenture 94 - 89 - 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. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 95 IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By_________________________________ Title: FLEET NATIONAL BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By_________________________________ Title: Trust Indenture 96 EXHIBIT A TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-16] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1990 AWA-16] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), 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 any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July 29, 1993, subjected to the Lien of such Original Indenture the airframe and engines therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on September 28, 1990 and assigned Conveyance No. P92334, which Amendment No. 1 has been duly recorded with the Federal Aviation Administration on May 18, 1992 and assigned Conveyance No. EE003012 and which Amendment No. 2 has been duly recorded with the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59676. 97 - 2 - WHEREAS(1), the Indenture relates to the 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [(3)] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. ---- ---------------- ---------------- NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and - -------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 98 - 3 - confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRFRAME(S) ( ) airframe(s) identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ------ ------------- together with all 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 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, Form of Trust Indenture Supplement 99 - 4 - sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1990 AWA-16] No. 3 of even date herewith (other than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 100 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By____________________________ Title: Form of Trust Indenture Supplement 101 SCHEDULE I TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-16]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- -------- --------- Series A $11,897,518 02-Jan-2009 6.85% Series B $ 4,413,774 02-Jul-2005 6.93% Series C $ 4,552,621 02-Jan-2002 6.86% Series D $ 4,249,113 02-Jan-2002 8.16% Series E $ 2,541,597 02-Jul-2002 10.50%
102 EQUIPMENT NOTES AMORTIZATION SERIES A Aircraft: N637AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 103 - 2 - SERIES B Aircraft: N637AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 104 - 3 - SERIES C Aircraft: N637AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 105 - 4 - SERIES D Aircraft: N637AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 106 - 5 - SERIES E Aircraft: N637AW Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 107 SCHEDULE II TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-16] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. Schedule II EX-4.41 42 RESTATED TRUST INDENTURE [GPA 1991 AWA-E1] 1 EXHIBIT 4.41 - -------------------------------------------------------------------------------- FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E1] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One IAE International Aero Engines AG V2500-A1 Engine Manufacturer's Serial No. V0025 Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS Page GRANTING CLAUSE.............................................................. 3 HABENDUM CLAUSE.............................................................. 6 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions........................................... 8 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes....................................... 21 SECTION 2.02. Issuance and Terms of Equipment Notes......................... 26 SECTION 2.03. Payments from Trust Indenture Estate Only........................................... 29 SECTION 2.04. Method of Payment............................................. 31 SECTION 2.05. Application of Payments....................................... 33 SECTION 2.06. Termination of Interest in Trust Indenture Estate............................... 34 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes................................ 34 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes................................ 36 SECTION 2.09. Payment of Expenses on Transfer; Cancellation................................... 36 SECTION 2.10. Mandatory Redemptions of Equipment Notes.......................................... 37 SECTION 2.11. Redemptions; Notice of Redemption............................. 37 SECTION 2.12. Option to Purchase Equipment Notes............................ 38 SECTION 2.13. Subordination................................................. 39 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions.................................... 40 SECTION 3.02. Event of Loss and Replacement................................. 42 SECTION 3.03. Payment After Indenture Event of Default, etc................................... 43 SECTION 3.04. Certain Payments.............................................. 46 SECTION 3.05. Other Payments................................................ 47 SECTION 3.06. Payments to Owner Trustee..................................... 47 SECTION 3.07. Investment of Amounts Held by Indenture Trustee........................................ 48 (i) 3 Page ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee........................................ 48 SECTION 4.02. Indenture Events of Default................................... 50 SECTION 4.03. Certain Rights................................................ 53 SECTION 4.04. Remedies...................................................... 55 SECTION 4.05. Return of the Engine, etc..................................... 58 SECTION 4.06. Remedies Cumulative........................................... 60 SECTION 4.07. Discontinuance of Proceedings................................. 60 SECTION 4.08. Waiver of Past Indenture Defaults............................. 60 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default.......................... 61 SECTION 5.02. Action Upon Instructions...................................... 62 SECTION 5.03. Indemnification............................................... 63 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions...................... 63 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions........... 64 SECTION 5.06. Replacement Engine............................................ 64 SECTION 5.07. Indenture Supplements for Replacements........................ 66 SECTION 5.08. Effect of Replacement......................................... 67 SECTION 5.09. Notices, etc.................................................. 67 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant.............................. 67 SECTION 5.11. Evidence of Action Taken by Note Holder....................... 70 SECTION 5.12. Right of Revocation of Action Taken........................... 70 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties............................... 70 SECTION 6.02. Absence of Duties............................................. 71 SECTION 6.03. No Representations or Warranties as to Engine or Documents............................ 71 SECTION 6.04. No Segregation of Moneys; No Interest......................... 72 SECTION 6.05. Reliance; Agents; Advice of Counsel........................... 72 SECTION 6.06. Capacity in Which Acting...................................... 73 SECTION 6.07. Compensation.................................................. 73 (ii) 4 Page SECTION 6.08. May Become Note Holder........................................ 74 SECTION 6.09. Further Assurances; Financing Statements...................... 74 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification...................................... 74 SECTION 7.02. Exculpation and Release of Liability.......................... 75 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee............................. 76 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor.............. 76 SECTION 8.03. Appointment of Separate Trustees.............................. 77 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures..................................... 80 SECTION 9.02. Effect of Supplemental Indenture.............................. 83 SECTION 9.03. Documents to Be Given to Trustee.............................. 83 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures........................ 83 SECTION 9.05. Trustees Protected............................................ 83 SECTION 9.06. Documents Mailed to Note Holders.............................. 83 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement............. 84 SECTION 9.08. Notices to Liquidity Provider................................. 84 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture..................................... 84 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders........................ 85 SECTION 10.03. Sale of Engine by Indenture Trustee is Binding....................................... 85 (iii) 5 Page SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Lessee and Note Holders....................... 85 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease............................... 85 SECTION 10.06. Notices...................................................... 86 SECTION 10.07. Severability................................................. 86 SECTION 10.08. No Oral Modifications or Continuing Waivers....................................... 86 SECTION 10.09. Successors and Assigns....................................... 86 SECTION 10.10. Headings..................................................... 87 SECTION 10.11. Normal Commercial Relations.................................. 87 SECTION 10.12. Governing Law; Counterpart Form.............................. 87 SECTION 10.13. Section 1110................................................. 87 EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements (iv) 6 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E1] FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E1] (this "First Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E1] No. 1 dated March 27, 1991, and as further supplemented by Trust Agreement Supplement [GPA 1991 AWA-E1] No. 2 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, which were recorded by the Federal Aviation Administration on March 28, 1991 as one instrument and assigned Conveyance No. 259534, as amended by Amendment No. 1 dated March 27, 1992, recorded by the Federal Trust Indenture 7 - 2 - Aviation Administration on April 30, 1992 and assigned Conveyance No. DD002565, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59677 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991 AWA-E1] No. 1 dated March 27, 1991, which were recorded by the Federal Aviation Administration on March 28, 1991 as one instrument and assigned Conveyance No. 259535 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA- E1] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 2 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Original Loan Certificates issued pursuant to the Original Indenture shall be prepaid and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this First Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Engine and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable Trust Indenture 8 - 3 - benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this First Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make- Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments and Excepted Rights (which collectively, excluding Excepted Payments and Excepted Rights but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: Trust Indenture 9 - 4 - (1) the Engine and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Engine or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement (to the extent assigned by the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment, with the Consents and Agreements attached thereto; and the Warranty Bill of Sale; in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Engine or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer, or any other Person in respect of any determination of invalidity of any such document; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval under or with respect of any thereof or to accept any surrender of the Engine or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or Trust Indenture 10 - 5 - otherwise, arising out of any default under any Assigned Sublease; (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Engine 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 requisition proceeds with respect to the Engine or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Engine or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii) payment in amounts which have been distributed to the Owner Trustee or any other Person in accordance with the provisions of this Agreement, AND SUBJECT TO Sections 2.03, 5.10 and 9.01 hereof. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto, and the original Warranty Bill of Sale. Concurrently with the delivery of this Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper Trust Indenture 11 - 6 - original executed counterparts of the Amended and Restated Lease and Lease Supplement No. 2. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the 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 and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments and Excepted Rights) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any Trust Indenture 12 - 7 - 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 the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or Trust Indenture 13 - 8 - consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments and Excepted Rights. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments (including all annexes, appendices, exhibits, schedules and supplements thereto) as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. Trust Indenture 14 - 9 - "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. SectionSection 101 et seq., as amended. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer included in the Purchase Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. Trust Indenture 15 - 10 - "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C, Series D and Series E, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means March 27, 1991. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term unsecured debt rating from each Rating Agency of at least A- 3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. Trust Indenture 16 - 11 - "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) any and all indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document) or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to the Lease (including, without limitation, Section 13 thereof and any corresponding payment of Supplemental Rent under the Lease), (ii) any proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Engine payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Engine by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document), or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Guarantor under the Tax Indemnification Agreement or the Amended and Restated Head Lease TIA (as defined in the Refunding Agreement), as the case may be, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Trust Indenture 17 - 12 - Lease, (vii) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate (or a portion thereof), (viii) any amount payable to the Owner Trustee, the Trust Company or the Owner Participant or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders attributable to the period prior to or on the Restatement Date or under the Original Participation Agreement, the Original Lease, the Parent Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the Amended and Restated Sublease TIA (as such terms are defined in the Refunding Agreement) or Retained Head Lease Rights and Obligations (as such term is defined in the Refunding Agreement), and (ix) subject to the last sentence of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner Participant or the Trust Company under the Operative Documents, whether or not a Lease Event of Default, a Lease Default, an Indenture Default or an Indenture Trustee Event has occurred and is continuing to demand, collect, sue for, give notices, make determinations, enforce or exercise all rights with respect to and otherwise obtain all amounts described in clauses (i) through (viii) above and the proceeds thereof. "Excepted Rights" means (i) those rights of the Owner Participant and the Owner Trustee under Section 5.10 of this Indenture, (ii) all rights under the Equity Collateral to make a claim for, collect and retain all amounts payable with respect to any Equity Collateral, (iii) all rights of the Owner Participant, the Trust Company or the Owner Trustee to compromise or waive any such right or modify, amend or waive any provision of any Operative Document conferring such rights with respect to Excepted Payments, and (iv) all rights of the Owner Trustee to exercise any election or option, or to make any decision or determination, or to give or receive any notice, consent, waiver or approval with respect to Excepted Payments. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and Trust Indenture 18 - 13 - undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this First Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement (to the extent assigned by the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto; and the Warranty Bill of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Engine and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated March 27, 1991, which was recorded as one instrument by the FAA with the Original Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this First Amended and Restated Indenture. Trust Indenture 19 - 14 - "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as assigned, amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA-E1] dated as of the date hereof and Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1] dated as of the date hereof and supplemented by Lease Supplement [GPA 1991 AWA-E1] No. 2 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Amended and Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. Trust Indenture 20 - 15 - "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Series C Equipment Notes, Series D Equipment Notes and Series E Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor Trust Indenture 21 - 16 - publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease. "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, which were recorded as one instrument by the FAA on March 28, 1991 and assigned Conveyance No. 259534, as amended by Amendment No. 1 dated March 27, 1992, recorded by the FAA on April 30, 1992 and assigned Conveyance No. DD002565, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on August 4, 1993 and assigned Conveyance No. F59677. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. Trust Indenture 22 - 17 - "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Engine Sublease Agreement [GPA 1990 AWA-E1] dated as of December 12, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means _____________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the five Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the five separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1991 AWA-E1], Trust Indenture 23 - 18 - dated as of the Delivery Date, among the Original Head Lessee, the Lessee and the Owner Trustee, together with the Consents and Agreements attached thereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1991 AWA-E1] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 2. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. Trust Indenture 24 - 19 - "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Series E" or "Series E Equipment Notes" means Equipment Notes issued and designated as "Series E" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series E." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee Trust Indenture 25 - 20 - in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments and Excepted Rights. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Warranty Bill of Sale" means a full warranty (as to title) bill of sale covering the Engine (excluding all Buyer Furnished Equipment) executed by the Original Head Lessee in favor of the Owner Trustee dated the Delivery Date. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1991 AWA-E1] DATED AS OF MARCH 15, 1991, AS AMENDED. SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE IAE INTERNATIONAL AERO ENGINES AG V2500-A1 ENGINE WITH MANUFACTURER'S SERIAL NUMBER V0025 No.____________ Date: [________, 1996] $____________________ DEBT RATE MATURITY DATE [_________] [_______,___] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $_______ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing on January 2, 1997, and thereafter Trust Indenture 27 - 22 - on July 2 and January 2 of each year, to and including ____________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E1], dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 28 - 23 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 29 - 24 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate - -------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. (4) To be inserted in the case of Series E Equipment Notes. Trust Indenture 30 - 25 - the subordination as provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](5) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. FLEET NATIONAL BANK, as Indenture Trustee By:_______________________________ Name: Title: - -------- (5) To be inserted in the case of a Series B, Series C, Series D or Series E Equipment Note. Trust Indenture 31 - 26 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in five separate series consisting of Series A, Series B, Series C, Series D and Series E and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Original Loan Certificates issued under the Original Indenture shall be concurrently prepaid. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 32 - 27 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 33 - 28 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" or "Series E Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of Trust Indenture 34 - 29 - individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Engine to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Engine. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such Trust Indenture 35 - 30 - other agreements to the contrary notwithstanding (except for any express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Trust Indenture 36 - 31 - Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such Trust Indenture 37 - 32 - funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of Trust Indenture 38 - 33 - such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Trust Indenture 39 - 34 - Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request Trust Indenture 40 - 35 - from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Trust Indenture 41 - 36 - Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. Subject to compliance by the Note Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes within 10 Business Days of the date of the written request therefor from the Note Holder. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, Trust Indenture 42 - 37 - the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Engine, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in Trust Indenture 43 - 38 - immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the Trust Indenture 44 - 39 - preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. Trust Indenture 45 - 40 - (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full, (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full and (iv) after the Secured Obligations in respect of Series C Equipment Notes have been paid in full, the Note Holders of Series D until the Secured Obligations in respect of Series D Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall Trust Indenture 46 - 41 - be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and (v) after giving effect to clause (iv) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series E Equipment Notes shall be distributed to the Note Holders of Series E ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series E Equipment Note bears to the aggregate amount of the payments then due under all Series E Equipment Notes; and Trust Indenture 47 - 42 - second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Engine as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Engine is to be substituted for the Engine subject to such Event of Loss as provided in Section 11 of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trust Indenture 48 - 43 - Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections. (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Engine) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus any tax, expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or Trust Indenture 49 - 44 - charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be Trust Indenture 50 - 45 - required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder Trust Indenture 51 - 46 - plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (v) after giving effect to paragraph (iv) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series E Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series E Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series E, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series E Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder and thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series E Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of Trust Indenture 52 - 47 - the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 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 Trust Indenture 53 - 48 - pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section. Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Owner Trustee or, in the event the Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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. ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or Trust Indenture 54 - 49 - suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; Trust Indenture 55 - 50 - (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; and (vi) the Owner Trustee will not enter into any business or other activity other than the business of owning the Engine, the leasing thereof to the Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant with responsibility for or familiarity with the transactions contemplated hereunder and under the other Operative Docu- Trust Indenture 56 - 51 - ments (or any Vice President) shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person (if any), as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure, in any case and either Trust Indenture 57 - 52 - individually or together with other then existing failures, shall have a material adverse effect on the rights and interests of the Indenture Trustee or any Note Holder and is not remedied within a period of 45 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person (if any) that may guarantee or support the Trust Indenture 58 - 53 - obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Engine shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the second day after the expiry of the applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the second day after the expiry of any applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Trust Indenture 59 - 54 - Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee or by demanding Excepted Payments or Excepted Rights; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease (after giving effect to any applicable grace period) as to (i) each of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-month period immediately preceding the Trust Indenture 60 - 55 - 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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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, and if the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Engine, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Engine. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Engine available to it, even though it shall not have taken possession of the Engine and shall not have possession thereof at the time of such sale. Trust Indenture 61 - 56 - Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Engine; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Engine is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under Trust Indenture 62 - 57 - no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall Trust Indenture 63 - 58 - have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. No Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Engine, etc. (a) Subject to the rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof and unless the Owner Participant shall have theretofore purchased the Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall have occurred and be continuing and the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, 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 designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue Trust Indenture 64 - 59 - all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments which the Indenture Trustee may be required or Trust Indenture 65 - 60 - may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right Trust Indenture 66 - 61 - consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Engine or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and Trust Indenture 67 - 62 - the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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 to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Trust Indenture 68 - 63 - Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Engine or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and Trust Indenture 69 - 64 - obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Engine or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. SECTION 5.06. Replacement Engine. (a) If at any time and from time to time, the Engine may, or may be required to, be replaced under Section 6(a) or 11(a) of the Lease by a Replacement Engine, as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Engine so to be released and the Replacement Engine. (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. [Intentionally reserved] B. With respect to the replacement of the Engine: (i) a description of the Engine which shall be identified by manufacturer's name and serial number; Trust Indenture 70 - 65 - (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) to be received as consideration for the Engine; (iii) that on the date of the Indenture Supplement relating to the Replacement Engine the Owner Trustee will hold title to the Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that the Replacement Engine is the same or an improved model as the Engine; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be less than the then value, remaining useful life and utility of the Engine, assuming the Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of the Replacement Engine; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to the Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Engine to be received as consideration for the Engine, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) [Intentionally reserved] (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed Trust Indenture 71 - 66 - of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Engine has been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting the Replacement Engine to the Lien of this Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the perfection and the effect of perfection or non-perfection of a security interest in the Engine or the Lien of this Indenture, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the establishment of title and perfection and the effect of perfection or non-perfection of a security interest in such Replacement Engine or the Lien of this Indenture are governed by the laws of a jurisdiction other than the United States, in such jurisdiction, the legal title to such Replacement Engine and the Lien of this Indenture on such Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Engine to the same extent as with respect to the Engine prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set Trust Indenture 72 - 67 - forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Engine being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Engine as contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Engine being replaced shall be applicable to such Replacement Engine with the same force and effect as if such Replacement Engine was the same engine as the Engine being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Trust Indenture 73 - 68 - Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Engine; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) (i) the Indenture Trustee shall not, without the consent of the Owner Trustee, enter into, execute and deliver amendments or modifications in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment and (ii) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (A) enter into, execute and deliver waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; Trust Indenture 74 - 69 - (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee 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 pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. Trust Indenture 75 - 70 - SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee in its individual capacity shall be answerable or accountable under any circumstances, except for its own willful misconduct or Trust Indenture 76 - 71 - gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any recording or filing of the Lease or of this Indenture or any other document, or to see to the maintenance of any such recording or filing, (ii) to see to any insurance on the Engine, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Engine at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Engine. SECTION 6.03. No Representations or Warranties as to Engine or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH Trust Indenture 77 - 72 - SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE ENGINE 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 ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Engine the Owner Trustee shall have received whatever interest in the Engine was conveyed to it under the Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Engine shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof Trust Indenture 78 - 73 - 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third sentence of Section 2.04(a)) through agents or attorneys and shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no Trust Indenture 79 - 74 - right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 and as trustee) from and after the Restatement Date (whether or not also agreed to be indemnified against by any other Person under any other document) in any way relating Trust Indenture 80 - 75 - to or arising out of this Indenture, the Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or Trust Indenture 81 - 76 - any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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. Trust Indenture 82 - 77 - (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee and to the predecessor Indenture Trustee an instrument accepting and assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, Trust Indenture 83 - 78 - acting jointly with the Indenture Trustee, of all or any part of the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; Trust Indenture 84 - 79 - (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. Trust Indenture 85 - 80 - ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Engine or (D) otherwise adversely affect the Note Holders in any material respect, and (iii) the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trust Indenture 86 - 81 - Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Trust Indenture 87 - 82 - Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Engine or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Engine or any Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. Trust Indenture 88 - 83 - SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the Trust Indenture 89 - 84 - failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Engine or other property thereto or to release the Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Engine and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and release; provided, however, that this Indenture Trust Indenture 90 - 85 - and the trusts created hereby shall earlier terminate and this Indenture shall be of no further force or effect as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Engine by Indenture Trustee is Binding. Any sale or other conveyance of the Engine by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Engine. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of Trust Indenture 91 - 86 - the Engine, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex: 99339; answerback: CTNB-HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 Trust Indenture 92 - 87 - and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUC- TION, 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Engine and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees Trust Indenture 93 - 88 - that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 94 IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By____________________________________ Title: FLEET NATIONAL BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By____________________________________ Title: Trust Indenture 95 EXHIBIT A TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E1] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1991 AWA-E1] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), 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 Engine (such term and other defined terms in the Indenture being herein used with the same meanings) and any Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Engine or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July 29, 1993, subjected to the Lien of such Original Indenture the engine therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on March 28, 1991 and assigned Conveyance No. 259534, which Amendment No. 1 has been duly recorded with the Federal Aviation Administration on April 30, 1992 and assigned Conveyance No. DD002565 and which Amendment No. 2 has been duly recorded with the Federal Aviation Administration on August 4, 1993 and assigned Conveyance No. F59677. 96 - 2 - WHEREAS(1), the Indenture relates to the Engine 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [(3)] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture one or more engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. ---- ---------------- ---------------- NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt 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, - -------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 97 - 3 - transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRCRAFT ENGINE one aircraft engine having 750 or more rated takeoff horsepower or the equivalent thereof, identified as follows: Manufacturer's Manufacturer Model Serial Number ------------ ----- ------------- together with all equipment and accessories thereto belonging, by whomsoever manufactured, owned by the Owner Trustee and installed in or appurtenant to said aircraft engine. 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 security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1991 AWA-E1] No. 2 of even date herewith (other than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is Form of Trust Indenture Supplement 98 - 4 - hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Engine referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 99 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By____________________________ Title: Form of Trust Indenture Supplement 100 SCHEDULE I TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E1] MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- ---- --------- Series A $1,343,995 02-Jul-2009 6.85% Series B $ 503,996 02-Jan-2006 6.93% Series C $ 524,996 02-Jan-2004 6.86% Series D $ 489,995 02-Jul-2002 8.16% Series E $1,458,204 02-Jan-2004 10.50% 101 EQUIPMENT NOTES AMORTIZATION SERIES A Engine: V0025 Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 102 - 2 - SERIES B Engine: V0025 Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 103 - 3 - SERIES C Engine: V0025 Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 104 - 4 - SERIES D Engine: V0025 Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 105 - 5 - SERIES E Engine: V0025 Principal Amount Percentage of Original Repayment Date Amount to be Paid -------------- ----------------- 106 SCHEDULE II TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E1] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. Schedule II EX-4.42 43 RESTATED TRUST INDENTURE [GPA 1991 AWA-E2] 1 EXHIBIT 4.42 - -------------------------------------------------------------------------------- FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E2] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One IAE International Aero Engines AG V2500-A1 Engine Manufacturer's Serial No. V0049 Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS Page ---- GRANTING CLAUSE............................................................. 3 HABENDUM CLAUSE............................................................. 6 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions.......................................... 8 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes...................................... 21 SECTION 2.02. Issuance and Terms of Equipment Notes........................ 26 SECTION 2.03. Payments from Trust Indenture Estate Only....................................................... 29 SECTION 2.04. Method of Payment............................................ 31 SECTION 2.05. Application of Payments...................................... 33 SECTION 2.06. Termination of Interest in Trust Indenture Estate........................................... 34 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes............................................ 34 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes............................................ 36 SECTION 2.09. Payment of Expenses on Transfer; Cancellation............................................... 36 SECTION 2.10. Mandatory Redemptions of Equipment Notes...................................................... 37 SECTION 2.11. Redemptions; Notice of Redemption............................ 37 SECTION 2.12. Option to Purchase Equipment Notes........................... 38 SECTION 2.13. Subordination................................................ 39 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions................................... 40 SECTION 3.02. Event of Loss and Replacement................................ 42 SECTION 3.03. Payment After Indenture Event of Default, etc............................................... 43 SECTION 3.04. Certain Payments............................................. 46 SECTION 3.05. Other Payments............................................... 47 SECTION 3.06. Payments to Owner Trustee.................................... 47 SECTION 3.07. Investment of Amounts Held by Indenture Trustee.................................................... 48 (i) 3 Page ---- ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee.................................................... 48 SECTION 4.02. Indenture Events of Default.................................. 50 SECTION 4.03. Certain Rights............................................... 53 SECTION 4.04. Remedies..................................................... 55 SECTION 4.05. Return of the Engine, etc.................................... 58 SECTION 4.06. Remedies Cumulative.......................................... 60 SECTION 4.07. Discontinuance of Proceedings................................ 60 SECTION 4.08. Waiver of Past Indenture Defaults............................ 60 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default......................... 61 SECTION 5.02. Action Upon Instructions..................................... 62 SECTION 5.03. Indemnification.............................................. 63 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions.................................. 63 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions....................... 64 SECTION 5.06. Replacement Engine........................................... 64 SECTION 5.07. Indenture Supplements for Replacements....................... 66 SECTION 5.08. Effect of Replacement........................................ 67 SECTION 5.09. Notices, etc................................................. 67 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant.......................................... 67 SECTION 5.11. Evidence of Action Taken by Note Holder...................... 70 SECTION 5.12. Right of Revocation of Action Taken.......................... 70 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties.............................. 70 SECTION 6.02. Absence of Duties............................................ 71 SECTION 6.03. No Representations or Warranties as to Engine or Documents........................................ 71 SECTION 6.04. No Segregation of Moneys; No Interest........................ 72 SECTION 6.05. Reliance; Agents; Advice of Counsel.......................... 72 SECTION 6.06. Capacity in Which Acting..................................... 73 SECTION 6.07. Compensation................................................. 73 (ii) 4 Page ---- SECTION 6.08. May Become Note Holder....................................... 74 SECTION 6.09. Further Assurances; Financing Statements................................................. 74 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification..................................... 74 SECTION 7.02. Exculpation and Release of Liability......................... 75 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee............................ 76 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor.......................... 76 SECTION 8.03. Appointment of Separate Trustees............................. 77 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures................................................. 80 SECTION 9.02. Effect of Supplemental Indenture............................. 83 SECTION 9.03. Documents to Be Given to Trustee............................. 83 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures.................................... 83 SECTION 9.05. Trustees Protected........................................... 83 SECTION 9.06. Documents Mailed to Note Holders............................. 83 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement......................... 84 SECTION 9.08. Notices to Liquidity Provider................................ 84 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture.................................... 84 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders.................................... 85 SECTION 10.03. Sale of Engine by Indenture Trustee is Binding................................................... 85 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, (iii) 5 Page ---- Lessee and Note Holders................................... 85 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease........................................... 85 SECTION 10.06. Notices..................................................... 86 SECTION 10.07. Severability................................................ 86 SECTION 10.08. No Oral Modifications or Continuing Waivers................................................... 86 SECTION 10.09. Successors and Assigns...................................... 86 SECTION 10.10. Headings.................................................... 87 SECTION 10.11. Normal Commercial Relations................................. 87 SECTION 10.12. Governing Law; Counterpart Form............................. 87 SECTION 10.13. Section 1110................................................ 87 EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements (iv) 6 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E2] FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E2] (this "First Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E2] No. 1 dated March 27, 1991, and as further supplemented by Trust Agreement Supplement [GPA 1991 AWA-E2] No. 2 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, which were recorded by the Federal Aviation Administration on March 28, 1991 as one instrument and assigned Conveyance No. L62815, as amended by Amendment No. 1 dated March 27, 1992, recorded by the Federal Trust Indenture 7 - 2 - Aviation Administration on April 29, 1992 and assigned Conveyance No. DD002563, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the Federal Aviation Administration on August 6, 1993 and assigned Conveyance No. F59679 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991 AWA-E2] No. 1 dated March 27, 1991, which were recorded by the Federal Aviation Administration on March 28, 1991 as one instrument and assigned Conveyance No. L62816 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA-E2] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 2 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Original Loan Certificates issued pursuant to the Original Indenture shall be prepaid and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this First Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Engine and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable Trust Indenture 8 - 3 - benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this First Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments and Excepted Rights (which collectively, excluding Excepted Payments and Excepted Rights but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: Trust Indenture 9 - 4 - (1) the Engine and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Engine or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement (to the extent assigned by the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment, with the Consents and Agreements attached thereto; and the Warranty Bill of Sale; in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Engine or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer, or any other Person in respect of any determination of invalidity of any such document; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval under or with respect of any thereof or to accept any surrender of the Engine or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or Trust Indenture 10 - 5 - otherwise, arising out of any default under any Assigned Sublease; (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Engine 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 requisition proceeds with respect to the Engine or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Engine or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii) payment in amounts which have been distributed to the Owner Trustee or any other Person in accordance with the provisions of this Agreement, AND SUBJECT TO Sections 2.03, 5.10 and 9.01 hereof. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto, and the original Warranty Bill of Sale. Concurrently with the delivery of this Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper Trust Indenture 11 - 6 - original executed counterparts of the Amended and Restated Lease and Lease Supplement No. 2. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the 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 and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments and Excepted Rights) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any Trust Indenture 12 - 7 - 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 the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or Trust Indenture 13 - 8 - consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments and Excepted Rights. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments (including all annexes, appendices, exhibits, schedules and supplements thereto) as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. Trust Indenture 14 - 9 - "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer included in the Purchase Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. Trust Indenture 15 - 10 - "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C, Series D and Series E, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means March 27, 1991. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. Trust Indenture 16 - 11 - "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) any and all indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document) or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to the Lease (including, without limitation, Section 13 thereof and any corresponding payment of Supplemental Rent under the Lease), (ii) any proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Engine payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Engine by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document), or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Guarantor under the Tax Indemnification Agreement or the Amended and Restated Head Lease TIA (as defined in the Refunding Agreement), as the case may be, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Trust Indenture 17 - 12 - Lease, (vii) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate (or a portion thereof), (viii) any amount payable to the Owner Trustee, the Trust Company or the Owner Participant or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders attributable to the period prior to or on the Restatement Date or under the Original Participation Agreement, the Original Lease, the Parent Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the Amended and Restated Sublease TIA (as such terms are defined in the Refunding Agreement) or Retained Head Lease Rights and Obligations (as such term is defined in the Refunding Agreement), and (ix) subject to the last sentence of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner Participant or the Trust Company under the Operative Documents, whether or not a Lease Event of Default, a Lease Default, an Indenture Default or an Indenture Trustee Event has occurred and is continuing to demand, collect, sue for, give notices, make determinations, enforce or exercise all rights with respect to and otherwise obtain all amounts described in clauses (i) through (viii) above and the proceeds thereof. "Excepted Rights" means (i) those rights of the Owner Participant and the Owner Trustee under Section 5.10 of this Indenture, (ii) all rights under the Equity Collateral to make a claim for, collect and retain all amounts payable with respect to any Equity Collateral, (iii) all rights of the Owner Participant, the Trust Company or the Owner Trustee to compromise or waive any such right or modify, amend or waive any provision of any Operative Document conferring such rights with respect to Excepted Payments, and (iv) all rights of the Owner Trustee to exercise any election or option, or to make any decision or determination, or to give or receive any notice, consent, waiver or approval with respect to Excepted Payments. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and Trust Indenture 18 - 13 - undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this First Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement (to the extent assigned by the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto; and the Warranty Bill of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Engine and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated March 27, 1991, which was recorded as one instrument by the FAA with the Original Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this First Amended and Restated Indenture. Trust Indenture 19 - 14 - "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as assigned, amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA-E2] dated as of the date hereof and Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E2] dated as of the date hereof and supplemented by Lease Supplement [GPA 1991 AWA-E2] No. 2 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Amended and Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. Trust Indenture 20 - 15 - "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Series C Equipment Notes, Series D Equipment Notes and Series E Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor Trust Indenture 21 - 16 - publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease. "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, which were recorded as one instrument by the FAA on March 28, 1991 and assigned Conveyance No. L62815, as amended by Amendment No. 1 dated March 27, 1992, recorded by the FAA on April 29, 1992 and assigned Conveyance No. DD002563, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on August 6, 1993 and assigned Conveyance No. F59679. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. Trust Indenture 22 - 17 - "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Engine Sublease Agreement [GPA 1990 AWA-E2] dated as of December 12, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means ______________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the five Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the five separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1991 AWA-E2], Trust Indenture 23 - 18 - dated as of the Delivery Date, among the Original Head Lessee, the Lessee and the Owner Trustee, together with the Consents and Agreements attached thereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1991 AWA-E2] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 2. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. Trust Indenture 24 - 19 - "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Series E" or "Series E Equipment Notes" means Equipment Notes issued and designated as "Series E" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series E." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee Trust Indenture 25 - 20 - in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments and Excepted Rights. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Warranty Bill of Sale" means a full warranty (as to title) bill of sale covering the Engine (excluding all Buyer Furnished Equipment) executed by the Original Head Lessee in favor of the Owner Trustee dated the Delivery Date. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1991 AWA-E2] DATED AS OF MARCH 15, 1991, AS AMENDED. SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE IAE INTERNATIONAL AERO ENGINES AG V2500-A1 ENGINE WITH MANUFACTURER'S SERIAL NUMBER V0049 No.____________ Date: [________,1996] $_______________________ DEBT RATE MATURITY DATE [________] [_______,___] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $_______ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing on January 2, 1997, and thereafter Trust Indenture 27 - 22 - on July 2 and January 2 of each year, to and including ___________,_____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E2], dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 28 - 23 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 29 - 24 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate - ---------- 1 To be inserted in the case of Series B Equipment Notes. 2 To be inserted in the case of Series C Equipment Notes. 3 To be inserted in the case of Series D Equipment Notes. 4 To be inserted in the case of Series E Equipment Notes. Trust Indenture 30 - 25 - the subordination as provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](5) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. FLEET NATIONAL BANK, as Indenture Trustee By:_______________________________ Name: Title: - ---------- 5 To be inserted in the case of a Series B, Series C, Series D or Series E Equipment Note. Trust Indenture 31 - 26 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in five separate series consisting of Series A, Series B, Series C, Series D and Series E and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Original Loan Certificates issued under the Original Indenture shall be concurrently prepaid. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 32 - 27 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 33 - 28 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" or "Series E Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of Trust Indenture 34 - 29 - individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Engine to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Engine. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such Trust Indenture 35 - 30 - other agreements to the contrary notwithstanding (except for any express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Trust Indenture 36 - 31 - Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such Trust Indenture 37 - 32 - funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of Trust Indenture 38 - 33 - such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Trust Indenture 39 - 34 - Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request Trust Indenture 40 - 35 - from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Trust Indenture 41 - 36 - Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. Subject to compliance by the Note Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes within 10 Business Days of the date of the written request therefor from the Note Holder. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, Trust Indenture 42 - 37 - the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Engine, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in Trust Indenture 43 - 38 - immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the Trust Indenture 44 - 39 - preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. Trust Indenture 45 - 40 - (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full, (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full and (iv) after the Secured Obligations in respect of Series C Equipment Notes have been paid in full, the Note Holders of Series D until the Secured Obligations in respect of Series D Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall Trust Indenture 46 - 41 - be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and (v) after giving effect to clause (iv) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series E Equipment Notes shall be distributed to the Note Holders of Series E ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series E Equipment Note bears to the aggregate amount of the payments then due under all Series E Equipment Notes; and Trust Indenture 47 - 42 - second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Engine as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Engine is to be substituted for the Engine subject to such Event of Loss as provided in Section 11 of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trust Indenture 48 - 43 - Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections. (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Engine) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus any tax, expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or Trust Indenture 49 - 44 - charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be Trust Indenture 50 - 45 - required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder Trust Indenture 51 - 46 - plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (v) after giving effect to paragraph (iv) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series E Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series E Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series E, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series E Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder and thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series E Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of Trust Indenture 52 - 47 - the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 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 Trust Indenture 53 - 48 - pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section. Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Owner Trustee or, in the event the Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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. ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or Trust Indenture 54 - 49 - suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; Trust Indenture 55 - 50 - (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; and (vi) the Owner Trustee will not enter into any business or other activity other than the business of owning the Engine, the leasing thereof to the Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant with responsibility for or familiarity with the transactions contemplated hereunder and under the other Operative Docu- Trust Indenture 56 - 51 - ments (or any Vice President) shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person (if any), as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure, in any case and either Trust Indenture 57 - 52 - individually or together with other then existing failures, shall have a material adverse effect on the rights and interests of the Indenture Trustee or any Note Holder and is not remedied within a period of 45 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person (if any) that may guarantee or support the Trust Indenture 58 - 53 - obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Engine shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the second day after the expiry of the applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the second day after the expiry of any applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Trust Indenture 59 - 54 - Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee or by demanding Excepted Payments or Excepted Rights; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease (after giving effect to any applicable grace period) as to (i) each of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-month period immediately preceding the Trust Indenture 60 - 55 - 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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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, and if the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Engine, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Engine. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Engine available to it, even though it shall not have taken possession of the Engine and shall not have possession thereof at the time of such sale. Trust Indenture 61 - 56 - Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Engine; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Engine is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under Trust Indenture 62 - 57 - no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall Trust Indenture 63 - 58 - have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. No Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Engine, etc. (a) Subject to the rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof and unless the Owner Participant shall have theretofore purchased the Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall have occurred and be continuing and the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, 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 designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue Trust Indenture 64 - 59 - all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments which the Indenture Trustee may be required or Trust Indenture 65 - 60 - may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right Trust Indenture 66 - 61 - consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Engine or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and Trust Indenture 67 - 62 - the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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 to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Trust Indenture 68 - 63 - Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Engine or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and Trust Indenture 69 - 64 - obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. . The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Engine or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. SECTION 5.06. Replacement Engine. (a) If at any time and from time to time, the Engine may, or may be required to, be replaced under Section 6(a) or 11(a) of the Lease by a Replacement Engine, as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Engine so to be released and the Replacement Engine. (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. [Intentionally reserved] B. With respect to the replacement of the Engine: (i) a description of the Engine which shall be identified by manufacturer's name and serial number; Trust Indenture 70 - 65 - (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) to be received as consideration for the Engine; (iii) that on the date of the Indenture Supplement relating to the Replacement Engine the Owner Trustee will hold title to the Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that the Replacement Engine is the same or an improved model as the Engine; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be less than the then value, remaining useful life and utility of the Engine, assuming the Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of the Replacement Engine; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to the Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Engine to be received as consideration for the Engine, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) [Intentionally reserved] (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed Trust Indenture 71 - 66 - of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Engine has been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting the Replacement Engine to the Lien of this Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the perfection and the effect of perfection or non-perfection of a security interest in the Engine or the Lien of this Indenture, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the establishment of title and perfection and the effect of perfection or non-perfection of a security interest in such Replacement Engine or the Lien of this Indenture are governed by the laws of a jurisdiction other than the United States, in such jurisdiction, the legal title to such Replacement Engine and the Lien of this Indenture on such Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Engine to the same extent as with respect to the Engine prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set Trust Indenture 72 - 67 - forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Engine being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Engine as contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Engine being replaced shall be applicable to such Replacement Engine with the same force and effect as if such Replacement Engine was the same engine as the Engine being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Trust Indenture 73 - 68 - Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Engine; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) (i) the Indenture Trustee shall not, without the consent of the Owner Trustee, enter into, execute and deliver amendments or modifications in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment and (ii) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (A) enter into, execute and deliver waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; Trust Indenture 74 - 69 - (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee 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 pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. Trust Indenture 75 - 70 - SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee in its individual capacity shall be answerable or accountable under any circumstances, except for its own willful misconduct or Trust Indenture 76 - 71 - gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any recording or filing of the Lease or of this Indenture or any other document, or to see to the maintenance of any such recording or filing, (ii) to see to any insurance on the Engine, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Engine at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Engine. SECTION 6.03. No Representations or Warranties as to Engine or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH Trust Indenture 77 - 72 - SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE ENGINE 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 ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Engine the Owner Trustee shall have received whatever interest in the Engine was conveyed to it under the Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Engine shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof Trust Indenture 78 - 73 - 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third sentence of Section 2.04(a)) through agents or attorneys and shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no Trust Indenture 79 - 74 - right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 and as trustee) from and after the Restatement Date (whether or not also agreed to be indemnified against by any other Person under any other document) in any way relating Trust Indenture 80 - 75 - to or arising out of this Indenture, the Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or Trust Indenture 81 - 76 - any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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. Trust Indenture 82 - 77 - (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee and to the predecessor Indenture Trustee an instrument accepting and assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, Trust Indenture 83 - 78 - acting jointly with the Indenture Trustee, of all or any part of the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; Trust Indenture 84 - 79 - (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. Trust Indenture 85 - 80 - ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Engine or (D) otherwise adversely affect the Note Holders in any material respect, and (iii) the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trust Indenture 86 - 81 - Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Trust Indenture 87 - 82 - Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Engine or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Engine or any Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. Trust Indenture 88 - 83 - SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the Trust Indenture 89 - 84 - failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Engine or other property thereto or to release the Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Engine and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and release; provided, however, that this Indenture Trust Indenture 90 - 85 - and the trusts created hereby shall earlier terminate and this Indenture shall be of no further force or effect as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Engine by Indenture Trustee is Binding. Any sale or other conveyance of the Engine by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Engine. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of Trust Indenture 91 - 86 - the Engine, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex: 99339; answerback: CTNB-HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 Trust Indenture 92 - 87 - and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Engine and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees Trust Indenture 93 - 88 - that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 94 IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By_______________________________________ Title: FLEET NATIONAL BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By_______________________________________ Title: Trust Indenture 95 EXHIBIT A TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E2] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1991 AWA-E2] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), 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 Engine (such term and other defined terms in the Indenture being herein used with the same meanings) and any Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Engine or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July 29, 1993, subjected to the Lien of such Original Indenture the engine therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on March 28, 1991 and assigned Conveyance No. L62815, which Amendment No. 1 has been duly recorded with the Federal Aviation Administration on April 29, 1992 and assigned Conveyance No. DD002563 and which Amendment No. 2 has been duly recorded with the Federal Aviation Administration on August 6, 1993 and assigned Conveyance No. F59679. 96 - 2 - WHEREAS(1), the Indenture relates to the Engine 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [(3)] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture one or more engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt 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, - -------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 97 - 3 - transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRCRAFT ENGINE one aircraft engine having 750 or more rated takeoff horsepower or the equivalent thereof, identified as follows: Manufacturer's Manufacturer Model Serial Number ------------ ----- -------------- together with all equipment and accessories thereto belonging, by whomsoever manufactured, owned by the Owner Trustee and installed in or appurtenant to said aircraft engine. 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 security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1991 AWA-E2] No. 2 of even date herewith (other than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is Form of Trust Indenture Supplement 98 - 4 - hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Engine referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 99 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUSTCOMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By____________________________ Title: Form of Trust Indenture Supplement 100 SCHEDULE I TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E2]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- -------- --------- Series A $1,343,995 02-Jul-2009 6.85% Series B $ 503,996 02-Jan-2006 6.93% Series C $ 524,996 02-Jan-2004 6.86% Series D $ 489,995 02-Jul-2002 8.16% Series E $1,458,204 02-Jan-2004 10.50%
101 EQUIPMENT NOTES AMORTIZATION SERIES A Engine: V0049 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 102 - 2 - SERIES B Engine: V0049 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 103 - 3 - SERIES C Engine: V0049 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 104 - 4 - SERIES D Engine: V0049 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 105 - 5 - SERIES E Engine: V0049 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 106 SCHEDULE II TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E2] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. Schedule II EX-4.43 44 RESTATED TRUST INDENTURE [GPA 1991 AWA-E3] 1 EXHIBIT 4.43 - -------------------------------------------------------------------------------- FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E3] Dated as of November 26, 1996 between WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein but solely as Owner Trustee and FLEET NATIONAL BANK, not in its individual capacity except as expressly provided herein but solely as Indenture Trustee - -------------------------------------------------------------------------------- Secured Equipment Notes Covering One IAE International Aero Engines AG V2500-A1 Engine Manufacturer's Serial No. V0019 Leased by America West Airlines, Inc. - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS Page GRANTING CLAUSE.............................................................. 3 HABENDUM CLAUSE.............................................................. 6 ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions........................................... 8 ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes....................................... 21 SECTION 2.02. Issuance and Terms of Equipment Notes......................... 26 SECTION 2.03. Payments from Trust Indenture Estate Only........................................... 29 SECTION 2.04. Method of Payment............................................. 31 SECTION 2.05. Application of Payments....................................... 33 SECTION 2.06. Termination of Interest in Trust Indenture Estate............................... 34 SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes................................ 34 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes................................ 36 SECTION 2.09. Payment of Expenses on Transfer; Cancellation................................... 36 SECTION 2.10. Mandatory Redemptions of Equipment Notes.......................................... 37 SECTION 2.11. Redemptions; Notice of Redemption............................. 37 SECTION 2.12. Option to Purchase Equipment Notes............................ 38 SECTION 2.13. Subordination................................................. 39 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions.................................... 40 SECTION 3.02. Event of Loss and Replacement................................. 42 SECTION 3.03. Payment After Indenture Event of Default, etc................................... 43 SECTION 3.04. Certain Payments.............................................. 46 SECTION 3.05. Other Payments................................................ 47 SECTION 3.06. Payments to Owner Trustee..................................... 47 SECTION 3.07. Investment of Amounts Held by Indenture Trustee........................................ 48 (i) 3 Page ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee........................................ 48 SECTION 4.02. Indenture Events of Default................................... 50 SECTION 4.03. Certain Rights................................................ 53 SECTION 4.04. Remedies...................................................... 55 SECTION 4.05. Return of the Engine, etc..................................... 58 SECTION 4.06. Remedies Cumulative........................................... 60 SECTION 4.07. Discontinuance of Proceedings................................. 60 SECTION 4.08. Waiver of Past Indenture Defaults............................. 60 ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default.......................... 61 SECTION 5.02. Action Upon Instructions...................................... 62 SECTION 5.03. Indemnification............................................... 63 SECTION 5.04. No Duties Except as Specified in Indenture or Instructions...................... 63 SECTION 5.05. No Action Except Under Lease, Refunding Agreement, Indenture or Instructions........... 64 SECTION 5.06. Replacement Engine............................................ 64 SECTION 5.07. Indenture Supplements for Replacements........................ 66 SECTION 5.08. Effect of Replacement......................................... 67 SECTION 5.09. Notices, etc.................................................. 67 SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant.............................. 67 SECTION 5.11. Evidence of Action Taken by Note Holder....................... 70 SECTION 5.12. Right of Revocation of Action Taken........................... 70 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties............................... 70 SECTION 6.02. Absence of Duties............................................. 71 SECTION 6.03. No Representations or Warranties as to Engine or Documents............................ 71 SECTION 6.04. No Segregation of Moneys; No Interest......................... 72 SECTION 6.05. Reliance; Agents; Advice of Counsel........................... 72 SECTION 6.06. Capacity in Which Acting...................................... 73 SECTION 6.07. Compensation.................................................. 73 (ii) 4 Page SECTION 6.08. May Become Note Holder........................................ 74 SECTION 6.09. Further Assurances; Financing Statements..................................... 74 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. Scope of Indemnification...................................... 74 SECTION 7.02. Exculpation and Release of Liability.......................... 75 ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee............................. 76 SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor.............. 76 SECTION 8.03. Appointment of Separate Trustees.............................. 77 ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures..................................... 80 SECTION 9.02. Effect of Supplemental Indenture.............................. 83 SECTION 9.03. Documents to Be Given to Trustee.............................. 83 SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures........................ 83 SECTION 9.05. Trustees Protected............................................ 83 SECTION 9.06. Documents Mailed to Note Holders.............................. 83 SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement............. 84 SECTION 9.08. Notices to Liquidity Provider................................. 84 ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture..................................... 84 SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders........................ 85 SECTION 10.03. Sale of Engine by Indenture Trustee is Binding....................................... 85 SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, (iii) 5 Page Lessee and Note Holders....................... 85 SECTION 10.05. No Action Contrary to Lessee's Rights Under the Lease............................... 85 SECTION 10.06. Notices...................................................... 86 SECTION 10.07. Severability................................................. 86 SECTION 10.08. No Oral Modifications or Continuing Waivers....................................... 86 SECTION 10.09. Successors and Assigns....................................... 86 SECTION 10.10. Headings..................................................... 87 SECTION 10.11. Normal Commercial Relations.................................. 87 SECTION 10.12. Governing Law; Counterpart Form.............................. 87 SECTION 10.13. Section 1110................................................. 87 EXHIBIT A - Form of Trust Indenture Supplement SCHEDULE I - Equipment Notes Amortization SCHEDULE II - Pass Through Trust Agreements (iv) 6 FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E3] FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E3] (this "First Amended and Restated Indenture" or this "Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise specifically set forth herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity, together with its successors, the "Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), a national banking association, not in its individual capacity except as otherwise specifically set forth herein, but solely as indenture trustee hereunder (in such capacity, together with its successors, the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and Wilmington Trust Company entered into the Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E3] No. 1 dated March 27, 1991, and as further supplemented by Trust Agreement Supplement [GPA 1991 AWA-E3] No. 2 dated the date hereof (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among other things, Wilmington Trust Company has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of (to the extent set forth herein), and with the priority of certain payments to, the Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, which were recorded by the Federal Aviation Administration on March 28, 1991 as one instrument and assigned Conveyance No. M25990, as amended by Amendment No. 1 dated March 27, 1992, recorded by the Federal Trust Indenture 7 - 2 - Aviation Administration on April 30, 1992 and assigned Conveyance No. DD002564, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the Federal Aviation Administration on August 11, 1993 and assigned Conveyance No. F59684 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991 AWA-E3] No. 1 dated March 27, 1991, which were recorded by the Federal Aviation Administration on March 28, 1991 as one instrument and assigned Conveyance No. M25991 (collectively, as so amended, supplemented or otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the Original Indenture) the Original Loan Certificates; WHEREAS, the parties have agreed to (i) assign, amend and restate the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA-E3] dated as of the date hereof among the Original Head Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] dated as of the date hereof between the Owner Trustee and the Lessee (as so assigned, amended and restated, the "Amended and Restated Lease" or the "Lease") and to enter into Lease Supplement No. 2 and (ii) cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Original Loan Certificates issued pursuant to the Original Indenture shall be prepaid and new Equipment Notes shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this First Amended and Restated Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's estate, right, title and interest in and to the Engine and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease (as amended and restated to date and as the same may at any time and from time to time be further amended, restated or otherwise modified in accordance with the terms thereof and hereof) and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable Trust Indenture 8 - 3 - benefit and security of the Note Holders, subject to Section 2.13 and Article III hereof; WHEREAS, all things have been done to make the Equipment Notes, when executed by the Owner Trustee and authenticated, issued and delivered by the Indenture Trustee hereunder, the legal, valid and binding obligations of the Owner Trustee; and WHEREAS, all things necessary to make this First Amended and Restated Indenture the legal, valid and binding obligation of the Owner Trustee, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained herein and in the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing hereunder and under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Note Holders and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Notes by the Holders thereof, and 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, its successors and assigns, for the security and benefit of the Note Holders from time to time, a security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights, interests and privileges, whether now or hereafter acquired, other than Excepted Payments and Excepted Rights (which collectively, excluding Excepted Payments and Excepted Rights but including all property hereafter specifically subjected to the Lien of this Indenture by any Indenture Supplement or any indenture supplemental hereto, are included within the Trust Indenture Estate), to wit: Trust Indenture 9 - 4 - (1) the Engine and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire an interest under the Lease, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Engine or any such replacements or substitutions therefor, as provided in this Indenture, and all records, logs and other documents to which the Owner Trustee shall from time to time acquire an interest at any time maintained by the Lessee with respect to the foregoing property; (2) the Lease (including each Lease Supplement) and all Rent thereunder, including, without limitation, all amounts of Basic Rent, Supplemental Rent and payments of any kind thereunder; the Refunding Agreement; the Purchase Agreement (to the extent assigned by the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment, with the Consents and Agreements attached thereto; and the Warranty Bill of Sale; in each case including, without limitation, (x) all rights of the Owner Trustee to exercise any election or option or to make any decision or determination or to give any notice, consent, waiver or approval or to take any other action under or in respect of any such document or to accept surrender or redelivery of the Engine or any part thereof, as well as all the rights, powers and remedies on the part of the Owner Trustee, whether arising under any such document or by statute or at law or in equity, or otherwise, arising out of any Lease Event of Default, and (y) any right to restitution from the Lessee, the Manufacturer, or any other Person in respect of any determination of invalidity of any such document; (3) each Sublease Assignment and each Assigned Sublease (to the extent assigned under such Sublease Assignment), and including, without limitation, all rents or other payments of any kind made under such Assigned Sublease (to the extent assigned under such Sublease Assignment), all collateral security or credit support (in the nature of a guarantee, letter of credit, credit insurance, Lien on or security interest in any property or otherwise) for the obligations of the Permitted Sublessee thereunder (to the extent assigned under such Sublease Assignment) and all rights of the Owner Trustee to exercise any election or option or to give any notice, consent, waiver, or approval under or with respect of any thereof or to accept any surrender of the Engine or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee (in each case to the extent assigned to the Owner Trustee), whether arising under any Assigned Sublease or any Sublease Assignment or by statute or at law or in equity, or Trust Indenture 10 - 5 - otherwise, arising out of any default under any Assigned Sublease; (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, without limitation, all payments or proceeds payable to the Owner Trustee after termination of the Lease with respect to the Engine 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 requisition proceeds with respect to the Engine or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the Lease), and all insurance proceeds with respect to the Engine or any part thereof, including but not limited to the insurance required under Section 12 of the Lease or under any comparable provision of any Assigned Sublease (but excluding any excess insurance maintained by the Lessee and not required under Section 12 of the Lease or any Assigned Sublease); (6) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Document and held or required to be held by the Indenture Trustee hereunder; (7) all rights of the Owner Trustee to amounts paid or payable by the Lessee to the Owner Trustee under the Refunding Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; and (8) all proceeds of the foregoing. PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii) payment in amounts which have been distributed to the Owner Trustee or any other Person in accordance with the provisions of this Agreement, AND SUBJECT TO Sections 2.03, 5.10 and 9.01 hereof. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel paper original executed counterparts of the Original Lease and Lease Supplement No. 1, certified copies of the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto, and the original Warranty Bill of Sale. Concurrently with the delivery of this Indenture, the Owner Trustee is delivering to the Indenture Trustee the chattel paper Trust Indenture 11 - 6 - original executed counterparts of the Amended and Restated Lease and Lease Supplement No. 2. All property referred to in this Granting Clause, whenever acquired by the Owner Trustee, shall secure all obligations under and with respect to the Equipment Notes 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, in trust for the benefit and security of the Note Holders from time to time, except as set forth in Section 2.13 and Article III hereof without any preference, distinction or priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Note 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, or except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the 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 and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds but excluding Excepted Payments and Excepted Rights) due and to become due to the Owner Trustee under or arising out of the Indenture Documents and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any Trust Indenture 12 - 7 - 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 the Lease, the Lessee is directed to make all payments of Rent (other than Excepted Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excepted Payments) directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed from and after (i) notice of the occurrence of a Lease Event of Default and (ii) notice that the Lease is declared or deemed in default, to make all payments of rent and all other amounts which are required to be paid to or deposited with the Lessee pursuant to the related Assigned Sublease and which are assigned thereunder directly to the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application or to be held as provided in this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all moneys from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner Trustee is entitled to distribution of such moneys pursuant to this Indenture and (b) that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as this Indenture shall remain in effect and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its estate, right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that, with respect to such estate, right, title and interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof, it will not, except as provided in this Indenture (including, without limitation, Section 9.01) and except as to Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under any of the Indenture Documents, enter into any agreement amending, modifying or supplementing any of the Indenture Documents, or execute any waiver or modification of, or Trust Indenture 13 - 8 - consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) give any notice or exercise any right or take any action under any of the Indenture Documents, or (iv) 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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph following the Habendum Clause. The Owner Trustee hereby ratifies and confirms its obligations under 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 might 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 is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excepted Payments and Excepted Rights. Further, nothing in the Granting Clause or the preceding paragraphs shall impair any of the rights of the Owner Trustee or the Owner Participant under Section 5.10 hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Special Definitions. The definitions contained in the Lease shall apply for all purposes of this Indenture except that 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) for all purposes of this Indenture. Except as otherwise indicated, all the agreements or instruments defined herein or in the Lease shall mean such agreements or instruments (including all annexes, appendices, exhibits, schedules and supplements thereto) as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of the other Operative Documents and references to various Persons shall be deemed to be references to and include their respective permitted successors and assigns. Trust Indenture 14 - 9 - "Amortization Amount" means, with respect to any Principal Amount Repayment Date, the amount set forth opposite such Principal Amount Repayment Date on the Amortization Schedule. "Amortization Schedule" means the amortization schedule for the Equipment Notes delivered pursuant to Section 2.02 hereof. "Assigned Sublease" means a Permitted Sublease required to be assigned to the Owner Trustee pursuant to Section 6(a) of the Lease. "Average Life Date" for each Equipment Note to be redeemed shall be the date which follows the redemption date by a period equal to the Remaining Weighted Average Life at the redemption date of such Equipment Note. "Remaining Weighted Average Life" of such Equipment Note, at the redemption date of such Equipment Note, shall be the number of days equal to the quotient obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment of principal, including the payment due on the maturity date of such Equipment Note, by (ii) the number of days from and including the redemption date to but excluding the scheduled payment date of such principal installment; by (b) the then unpaid Principal Amount of such Equipment Note. "Bankruptcy Code" means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq., as amended. "Business Day" means a day other than a Saturday, Sunday or a day on which banks are required or authorized to close in either The City of New York, New York or Hartford, Connecticut. "Cash Collateral Account" means one or more Eligible Deposit Accounts in the name of the Subordination Agent each maintained at the Subordination Agent, into which all amounts drawn under one or more Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited. "Code" means the Internal Revenue Code of 1986, as amended. "Consents and Agreements" means the confirmations by the Manufacturer included in the Purchase Agreement Warranties Assignment of the transfer of rights under the Purchase Agreement. Trust Indenture 15 - 10 - "Continuous Stay Period" has the meaning specified in Section 4.04(a). "Corporate Trust Office" means the principal corporate trust office of the Indenture Trustee located at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration, or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Trustee and the Note Holders. "Debt" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments. "Debt Rate" means, with respect to Series A, Series B, Series C, Series D and Series E, the rate per annum specified for such Series under the heading "Debt Rate" in Schedule I to this Indenture. "Delivery Date" means March 27, 1991. "Dollars", "U.S. $" and "$" mean the lawful currency of the United States of America. "Downgrade Drawing" has the meaning assigned to such term in Section 3.6(c) of the Intercreditor Agreement. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. "Eligible Institution" means (a) the corporate trust department of the Subordination Agent or any Pass Through Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from each Rating Agency of at least A-3 or its equivalent. Trust Indenture 16 - 11 - "Equipment Notes" means the Equipment Notes, in substantially the form set out in Section 2.01 hereof, issued by the Owner Trustee and authenticated by the Indenture Trustee pursuant to the terms of this Indenture. "Equity Collateral" has the meaning assigned to such term in the definition of "Excepted Payments." "Excepted Payments" means (i) any and all indemnity payments and interest in respect thereof paid or payable in respect of the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document) or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to the Lease (including, without limitation, Section 13 thereof and any corresponding payment of Supplemental Rent under the Lease), (ii) any proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Engine payable as a result of insurance claims paid respecting, or losses suffered by, the Trust Company or the Indenture Trustee in its individual capacity or the Owner Participant, (iii) any proceeds of insurance maintained with respect to the Engine by or for the benefit of the Owner Participant (whether directly or through the Owner Trustee) and not required under Section 12 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable to the Owner Participant, the Trust Company, the Owner Trustee (and not in support of any payment obligation of the Owner Trustee under any Indenture Document), or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders under Section 10 of the Lease or by the Lessee or the Parent Guarantor under the Tax Indemnification Agreement or the Amended and Restated Head Lease TIA (as defined in the Refunding Agreement), as the case may be, (v) Transaction Expenses paid or payable by the Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee or the Owner Participant pursuant to Section 21 of the Refunding Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease (including, without limitation, any replacement letter of credit (the "Equity Collateral")) and any payment or proceeds of any such Equity Collateral to the extent retained or applied as provided in Section 8(l) of the Trust Indenture 17 - 12 - Lease, (vii) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate (or a portion thereof), (viii) any amount payable to the Owner Trustee, the Trust Company or the Owner Participant or any of their respective successors, permitted assigns (and, in the case of a permitted assign of the Owner Participant that is a partnership, the partners of such partnership), directors, officers, employees, servants, agents, subsidiaries, affiliates or shareholders attributable to the period prior to or on the Restatement Date or under the Original Participation Agreement, the Original Lease, the Parent Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the Amended and Restated Sublease TIA (as such terms are defined in the Refunding Agreement) or Retained Head Lease Rights and Obligations (as such term is defined in the Refunding Agreement), and (ix) subject to the last sentence of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner Participant or the Trust Company under the Operative Documents, whether or not a Lease Event of Default, a Lease Default, an Indenture Default or an Indenture Trustee Event has occurred and is continuing to demand, collect, sue for, give notices, make determinations, enforce or exercise all rights with respect to and otherwise obtain all amounts described in clauses (i) through (viii) above and the proceeds thereof. "Excepted Rights" means (i) those rights of the Owner Participant and the Owner Trustee under Section 5.10 of this Indenture, (ii) all rights under the Equity Collateral to make a claim for, collect and retain all amounts payable with respect to any Equity Collateral, (iii) all rights of the Owner Participant, the Trust Company or the Owner Trustee to compromise or waive any such right or modify, amend or waive any provision of any Operative Document conferring such rights with respect to Excepted Payments, and (iv) all rights of the Owner Trustee to exercise any election or option, or to make any decision or determination, or to give or receive any notice, consent, waiver or approval with respect to Excepted Payments. "Excess Amount" has the meaning specified in Section 2.03(b) hereof. "FAA" means the Federal Aviation Administration of the United States Department of Transportation or any successor agency. "Final Drawing" means, in respect of a Liquidity Facility, a borrowing or drawing of all available and Trust Indenture 18 - 13 - undrawn amounts under such Liquidity Facility in accordance with the provisions thereof other than a Downgrade Drawing. "Government Obligations" means direct obligations of the United States of America that are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture," "this Indenture," and "the Indenture" mean this First Amended and Restated Indenture, as it may from time to time be supplemented or amended as herein provided, including as supplemented by any Indenture Supplement pursuant hereto. "Indenture Default" means an Indenture Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Indenture Event of Default. "Indenture Documents" means the Refunding Agreement; the Trust Agreement (including any Trust Supplements); the Lease (including any Lease Supplements); the Equipment Notes; this Indenture (including any Indenture Supplements); any Sublease Assignment; any Assigned Sublease; the Purchase Agreement (to the extent assigned by the Purchase Agreement Warranties Assignment); the Purchase Agreement Warranties Assignment and the Consents and Agreements attached thereto; and the Warranty Bill of Sale. "Indenture Event of Default" has the meaning set forth in Section 4.02 hereof. "Indentures" means, collectively, each Trust Indenture and Security Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "Indenture Supplement" or "Trust Indenture Supplement" means a supplement to this Indenture, in substantially the form of Exhibit A to this Indenture, which shall particularly describe the Engine and Replacement Engine included in the property of the Owner Trustee covered by this Indenture, including, without limitation, Trust Indenture Supplement No. 1 dated March 27, 1991, which was recorded as one instrument by the FAA with the Original Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996, which is being filed for recordation as one instrument by the FAA with this First Amended and Restated Indenture. Trust Indenture 19 - 14 - "Indenture Trustee Event" means either (i) the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) or (c) of this Indenture or (ii) the Indenture Trustee has taken action or notified the Owner Trustee that it intends to take action to foreclose the Lien of this Indenture or otherwise commence the exercise of any significant remedy under this Indenture or the Lease. "Interest Drawing" has the meaning assigned to such term in Section 3.6(a) of the Intercreditor Agreement. "Investment Earnings" means investment earnings on funds on deposit in the Trust Accounts net of losses and investment expenses of the Subordination Agent in making such investments. "Lease" means the Original Lease, as the same may be modified, supplemented or amended from time to time in accordance with the provisions thereof and hereof and of the Refunding Agreement including, without limitation, as assigned, amended and restated by Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA-E3] dated as of the date hereof and Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E3] dated as of the date hereof and supplemented by Lease Supplement [GPA 1991 AWA-E3] No. 2 dated November 26, 1996, which are being filed for recordation as one instrument with the FAA contemporaneously herewith. "Lease Default" means an event or condition that, with the giving of notice or the lapse of time or both, would become a Lease Event of Default. "Lease Event of Default" means any event or condition defined as an "Event of Default" in Section 17 of the Lease. "Lessee" means America West Airlines, Inc., a Delaware corporation, in its capacity as lessee under the Amended and Restated Lease, and its successors, and to the extent permitted by the Refunding Agreement, its assigns thereunder. "Lien" means any mortgage, chattel mortgage, pledge, lien, charge, encumbrance, lease, exercise of rights, security interest, lease in the nature of a security interest, statutory right in rem, or claim of any kind, including any thereof arising under any conditional sale agreement, equipment trust agreement or title retention agreement. Trust Indenture 20 - 15 - "Majority in Interest of Note Holders" means, as of a particular date of determination and subject to Section 2.6 of the Intercreditor Agreement, the Holders of more than 50% in aggregate unpaid Principal Amount of all Equipment Notes outstanding as of such date. For purposes of this definition, there shall be excluded any Equipment Notes held by the Owner Trustee or the Owner Participant or any interests of the Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment Notes then outstanding shall be held by the Owner Trustee or the Owner Participant) or any Equipment Notes held by the Lessee or any Affiliate of any thereof. "Make-Whole Amount" means, with respect to any Equipment Note, the amount (as determined by an independent investment banker selected by Lessee and reasonably acceptable to the Indenture Trustee and the Owner Participant) by which (a) the present value of the remaining scheduled payments of principal and interest from the redemption date to maturity of such Equipment Note computed by discounting each such payment on a semiannual basis from its respective Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to (i) in the case of Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield and (ii) in the case of Series C Equipment Notes, Series D Equipment Notes and Series E Equipment Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal amount of such Equipment Note plus accrued interest. For purposes of determining the Make-Whole Amount, "Treasury Yield" at the time of determination with respect to any Equipment Note means the interest rate (expressed as a semiannual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities market either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519). "H.15(519)" means the weekly statistical release designated as such, or any successor Trust Indenture 21 - 16 - publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable redemption date. "Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a U.S. Person or a U.S. Holder. "Note Holder" or "Holder" means any registered holder from time to time of one or more Equipment Notes as reflected in the Register maintained by the Registrar. "Officers' Certificate" means a certificate (i) signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, and (ii) signed by another officer of the Owner Trustee or the Lessee, as the case may be, certifying as to the authority and signature of such Responsible Officer, that is delivered to the Indenture Trustee. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions or (ii) Latham & Watkins or other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee or, in the case of legal counsel for the Owner Trustee, may be Morris, James, Hitchens & Williams or other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee. "Original Head Lessee" means GPA Leasing USA Sub I, Inc., a Connecticut corporation, in its capacity as lessee under the Original Lease. "Original Indenture" means the Trust Indenture and Security Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, which were recorded as one instrument by the FAA on March 28, 1991 and assigned Conveyance No. M25990, as amended by Amendment No. 1 dated March 27, 1992, recorded by the FAA on April 30, 1992 and assigned Conveyance No. DD002564, and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on August 11, 1993 and assigned Conveyance No. F59684. "Original Loan Certificates" means the Loan Certificates issued under and as defined in the Original Indenture. Trust Indenture 22 - 17 - "Original Sublessee" means America West Airlines, Inc. ("AWA"), a Delaware corporation, in its capacity as sublessee under the Engine Sublease Agreement [GPA 1990 AWA-E3] dated as of December 12, 1990 between the Original Head Lessee in its capacity as sublessor thereunder and AWA in its capacity as sublessee. "Owner Participant" means __________________, a Delaware corporation, as Owner Participant under the Trust Agreement, and its successors and permitted assigns. "Parent Guarantor" means GPA Group plc, a public limited company organized and existing under the laws of Ireland. "Pass Through Trust" means each of the five Pass Through Trusts established under the relevant Pass Through Trust Agreement. "Pass Through Trust Agreement" means the Pass Through Trust Agreements set forth on Schedule II hereto. "Pass Through Trustee" means Fleet National Bank, a national banking association, not in its individual capacity but solely as pass through trustee under each of the five separate Pass Through Trust Agreements. "Past Due Rate" means, with respect to any amount not paid when due (whether at stated maturity, by acceleration or otherwise) under or in respect of any Equipment Note, a rate of interest per annum (computed on the basis of a year of 360 days comprised of twelve 30-day months) equal to 1% in excess of the Debt Rate for such Equipment Note. "Payment Date" means each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Equipment Notes have been paid in full. "Principal Amount" with respect to an Equipment Note means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes. "Principal Amount Repayment Date" means each Payment Date on which any portion of the Principal Amount is due and payable in accordance with the Amortization Schedule. "Purchase Agreement Warranties Assignment" means the Purchase Agreement Warranties Assignment [GPA 1991 AWA-E3], Trust Indenture 23 - 18 - dated as of the Delivery Date, among the Original Head Lessee, the Lessee and the Owner Trustee, together with the Consents and Agreements attached thereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. "Rating Agencies" means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates issued pursuant to the Pass Through Trust Agreements and which shall then be rating the Certificates. Initially, the Rating Agencies shall consist of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc. "Refinancing Transaction" means the transactions contemplated by the Refunding Agreement and the other documents entered into on and in connection with the Refunding Agreement on the Restatement Date. "Refunding Agreement" means the Refunding Agreement [GPA 1991 AWA-E3] dated as of November 20, 1996, among the Lessee, the Original Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee. "Register" has the meaning set forth in Section 2.07 hereof. "Registrar" has the meaning set forth in Section 2.07 hereof. "Responsible Officer" means, in the case of the Lessee, the president or any other officer with authority of at least a vice president or, in the case of the Owner Trustee, an officer of the Owner Trustee in its Corporate Trust Administration Department. "Restatement Date" means November 26, 1996 or such other date agreed to by the parties to the Refunding Agreement as the date for the consummation of the Refinancing Transaction, as evidenced by the date of the filing with the FAA of Trust Indenture Supplement No. 2. "Secured Obligations" has the meaning set forth in Section 2.06 hereof. "Securities Act" means the Securities Act of 1933, as amended. Trust Indenture 24 - 19 - "Series A" or "Series A Equipment Notes" means Equipment Notes issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series A." "Series B" or "Series B Equipment Notes" means Equipment Notes issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series B." "Series C" or "Series C Equipment Notes" means Equipment Notes issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series C." "Series D" or "Series D Equipment Notes" means Equipment Notes issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series D." "Series E" or "Series E Equipment Notes" means Equipment Notes issued and designated as "Series E" hereunder, in the Principal Amount and maturities and bearing interest as specified in Section 2.02 and Schedule I hereto under the heading "Series E." "Sublease Assignment" means a sublease assignment by the Lessee in favor of the Owner Trustee (including the consent thereto given by the sublessee thereunder) with respect to the assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease. "Transaction Expenses" means the costs, fees, expenses and disbursements set forth in Section 21 of the Refunding Agreement. "Trust Accounts" has the meaning assigned to such term in Section 2.2(a) of the Intercreditor Agreement. "Trust Company" means Wilmington Trust Company, a Delaware banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustee. "Trust Indenture Estate" or "Indenture Estate" means all estate, right, title and interest of the Owner Trustee Trust Indenture 25 - 20 - in and to the properties, rights and interests covered by the Granting Clause of the Indenture, excluding, however, in each case, Excepted Payments and Excepted Rights. "U.S. Holder" or "U.S. Person" means any Person that is (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code (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) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Warranty Bill of Sale" means a full warranty (as to title) bill of sale covering the Engine (excluding all Buyer Furnished Equipment) executed by the Original Head Lessee in favor of the Owner Trustee dated the Delivery Date. Trust Indenture 26 - 21 - ARTICLE II THE EQUIPMENT NOTES SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1991 AWA-E3] DATED AS OF MARCH 15, 1991, AS AMENDED. SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ] ISSUED IN CONNECTION WITH ONE IAE INTERNATIONAL AERO ENGINES AG V2500-A1 ENGINE WITH MANUFACTURER'S SERIAL NUMBER V0019 No.____________ Date: [________,1996] $___________________ DEBT RATE MATURITY DATE [___________] [_______,___] WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, as amended, between the Owner Participant named therein and Wilmington Trust Company (herein as such Trust Agreement may be supplemented or amended from time to time called the "Trust Agreement"), hereby promises to pay to Fleet National Bank, as Subordination Agent under the Intercreditor Agreement, or the registered assignee thereof, the principal sum of $_______ (the "Principal Amount"), together with interest on the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Debt Rate indicated above. The Principal Amount of this Equipment Note shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing on January 2, 1997, and thereafter Trust Indenture 27 - 22 - on July 2 and January 2 of each year, to and including ______________, ____. Notwithstanding the foregoing or anything to the contrary contained herein, (i) the final payment made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note; and (ii) if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "Indenture" means the First Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E3], dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank) (the "Indenture Trustee"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Equipment Note and not defined herein shall have the respective meanings assigned in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of all or any portion of the Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Indenture or the Refunding Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Indenture, and each Holder hereof, by its acceptance of this Equipment Note, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as above provided and that none of the Owner Participant, the Owner Trustee and the Trust Indenture 28 - 23 - Indenture Trustee is personally liable or liable in any manner, including, without limitation, extending to any assets other than the Trust Indenture Estate to the Holder hereof for any amounts payable or any liability under this Equipment Note or, except as provided in the Indenture or in the Refunding Agreement, for any liability under the Indenture or the Refunding Agreement; provided, however, that nothing herein contained shall limit, restrict or impair any and all rights or remedies of the Indenture Trustee hereunder, subject always to the terms and provisions of the Indenture. There shall be maintained a Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Indenture. Any payment of any portion of the Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered promptly thereafter to the Indenture Trustee for cancellation. The Holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by law, any overdue interest and any other overdue amounts hereunder) to the date of such payment, second, to the payment of the portion of the Principal Amount of this Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of the portion of the Principal Amount of this Equipment Note remaining unpaid in the inverse order of its normal maturity. This Equipment Note is one of the Equipment Notes 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 Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture. Reference is hereby made to the Indenture and the Refunding Agreement for a complete statement of the rights and obligations of the Holder Trust Indenture 29 - 24 - of, and the nature and extent of the security for, this Equipment Note and the rights and obligations of the Holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, 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 Refunding Agreement each Holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate unpaid portion of the Principal Amount of Equipment Notes of different authorized denominations, as requested by the Holder surrendering the same. Prior to due presentment for registration of transfer of this Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Equipment Note is registered as the owner hereof for all purposes whether or not this Equipment Note be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration by the Indenture Trustee as provided in Section 4.04 of the Indenture. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this Equipment Note is issued subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate - -------- (1) To be inserted in the case of Series B Equipment Notes. (2) To be inserted in the case of Series C Equipment Notes. (3) To be inserted in the case of Series D Equipment Notes. (4) To be inserted in the case of Series E Equipment Notes. Trust Indenture 30 - 25 - the subordination as provided in the Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](5) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee By:_______________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Equipment Notes referred to in the within-mentioned Indenture. FLEET NATIONAL BANK, as Indenture Trustee By:_______________________________ Name: Title: - -------- (5) To be inserted in the case of a Series B, Series C, Series D or Series E Equipment Note. Trust Indenture 31 - 26 - SCHEDULE I EQUIPMENT NOTES AMORTIZATION Percentage of Principal Amount Principal Amount Repayment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment Notes shall be dated the date of issuance thereof, shall be issued in five separate series consisting of Series A, Series B, Series C, Series D and Series E and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Trust Agreements set forth in Schedule II to be attached hereto in connection therewith and (ii) the Original Loan Certificates issued under the Original Indenture shall be concurrently prepaid. The Equipment Notes shall be issued in registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an integral multiple of $1,000. Each Equipment Note shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Equipment Note shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note shall be in an amount sufficient to discharge in full the unpaid portion of the Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on Trust Indenture 32 - 27 - any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Equipment Note becomes due and payable is not a Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts, (iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or Section 21 of the Refunding Agreement, (b) any and all amounts received by the Owner Trustee which are payable by Lessee in respect of and equal to the Owner Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity Providers by the Subordination Agent under each Liquidity Facility (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee) other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Drawings under any Liquidity Facility except to the extent included in Net Interest and Related Charges (as defined below), and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (vii) or (viii) of the definition of Supplemental Rent. The Indenture Trustee shall have no duty or obligation to (i) verify or confirm the accuracy of any of the amounts (other than the portion of the Principal Amount of, and interest on, the Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine whether any amounts are owed by the Owner Trustee under this Section 2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures, and Trust Indenture 33 - 28 - (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default (as defined below) under any Equipment Note a fraction, the numerator of which is the aggregate principal balance then outstanding of the Equipment Notes issued hereunder and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" issued under the Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net Interest and Related Charges" means (as determined by the Subordination Agent in consultation with the Liquidity Providers and notified to the Indenture Trustee except that the Past Due Rate shall be determined by the Indenture Trustee and notified to the Subordination Agent) the sum of (i) the amount, if any, by which interest payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount which would be payable if such advances bore interest at the Designated Interest Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding liquidity facility) which result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section 2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) in respect of "Series A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes" issued under the Indentures, except with respect to that portion of any Final Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section 2.02, a "Payment Default" when used in connection with an "Equipment Note" issued under an Indenture means a default in the payment of principal thereof or interest thereon, other than a default in the payment of principal or interest on a "Series D Equipment Note" or "Series E Equipment Note" issued under the Indentures which has not been cured other than solely because of acceleration. For purposes of Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02. The Equipment Notes shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Equipment Notes bearing the signatures of Trust Indenture 34 - 29 - individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. The Owner Trustee may from time to time execute and deliver Equipment Notes with respect to the Engine to the Indenture Trustee for authentication upon original issue and such Equipment Notes shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Equipment Notes to be authenticated hereunder on original issue with respect to the Engine. No Equipment Note shall be secured by or be entitled to any benefit under this Indenture or be valid or obligatory for any purposes, unless there appears on such Equipment Note a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without impairing any of the other rights, powers, remedies, privileges or Liens of the Note Holders under this Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that, except as expressly provided in this Indenture, the Refunding Agreement or any other Operative Document, (i) the obligation to make all payments of all or any portion of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Equipment Notes, and the performance by the Owner Trustee of every obligation or covenant contained in this Indenture and in the Refunding Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Indenture and any other Operative Document other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Indenture or such Trust Indenture 35 - 30 - other agreements to the contrary notwithstanding (except for any express provisions or representations that the Trust Company is responsible for, or is making, for which there would be personal liability of the Trust Company), no recourse shall be had with respect to this Indenture or such other agreements against the Trust Company or against any institution or Person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them, and (ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Refunding Agreement or any of the other Operative Documents or under the Equipment Notes except as expressly provided herein (in the case of the Owner Trustee and the Indenture Trustee) or therein; provided, however, nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Indenture or such other agreements of rights and remedies against the Trust Indenture Estate. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Trust Company, the Owner Trustee or the Owner Participant is required, by reason of the Trust Company, the Owner Trustee or the Owner Participant being held to have recourse liability to any Note Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Trust Company, the Owner Trustee or the Owner Participant under the Operative Documents), to make payment on account of any amount payable as Principal Amount, Make-Whole Amount, if any, interest or other amounts on the Equipment Notes or under this Indenture and (iii) any Note Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Trust Company, the Owner Trustee or the Owner Participant on account of clause (ii) above (other than aforesaid), then such Note Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Trust Company, the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "Excess Amount" means the amount by which such payment exceeds the amount that would have been received by a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the Owner Participant had not become subject to the recourse liability referred to in clause (ii) above. Nothing contained in this Trust Indenture 36 - 31 - Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Trust Company, the Owner Trustee or the Owner Participant under the Refunding Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any other Operative Document. SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the manner provided herein. After transferring (or causing the transfer of) the above amounts to the Indenture Trustee, the Owner Trustee shall not have any responsibility for the distribution of such payment to any Note Holder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such Holder's Equipment Note or Equipment Notes to such Holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such Holder with a bank located in the continental United States the amount to be distributed to such Holder, for credit to the account of such Holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence 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 and without indemnification or right of reimbursement under any Operative Document, agrees to compensate such Holders for loss of use of funds in accordance with industry standards for this type of transaction until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made free and clear of and without reduction for or on account of all wire and like charges and without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so if such Trust Indenture 37 - 32 - funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Equipment Note is registered on the Register as the absolute owner and Holder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be affected by any notice to the contrary, unless and until such change is reflected in the Register. So long as any signatory to the Refunding Agreement or nominee thereof shall be a registered Note Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule III thereto and otherwise in the manner provided in or pursuant to the Refunding Agreement unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding shall constitute payment in respect of such Equipment Note) any and all United States withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (and such withholding shall constitute payment in respect of such Equipment Note) and timely pay the same to the appropriate authority in the name of and on behalf of the Note Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Note Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Note Holder, the Owner Participant and the Owner Trustee may reasonably request from time to time. If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Equipment Note(s) held by such Holder is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of Trust Indenture 38 - 33 - such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by law (after taking into account any applicable exemptions claimed by the Note Holder) to be withheld from payments hereunder or under the Equipment Notes held by such Holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Equipment Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment) or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such Holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such Holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Note Holder withholding taxes at the appropriate rate under law (and such withholding shall constitute payment in respect of such Equipment Notes) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. None of the Owner Trustee, the Owner Participant or the Lessee shall have any liability for the failure of the Indenture Trustee to withhold taxes in the manner provided for herein or for any false, inaccurate or untrue evidence provided by a Holder hereunder. SECTION 2.05. Application of Payments. In the case of each Equipment Note, each payment of Principal Amount, Make-Whole Trust Indenture 39 - 34 - Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and, to the extent permitted by law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Equipment Note (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Equipment Note; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not be subject to redemption except as provided in Sections 2.10 and 2.11 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Equipment Note in the inverse order of their normal maturity. SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note Holder and all other sums then payable to such Note Holder hereunder and under the Lease and the Refunding Agreement by the Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured Obligations") shall have been paid in full. SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes. The Indenture Trustee shall keep a register (the "Register") in which the Indenture Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of any Equipment Note intending to exchange such Equipment Note shall surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with a written request Trust Indenture 40 - 35 - from the registered Holder thereof for the issuance of a new Equipment Note, specifying, in the case of a surrender for transfer, the name and address of the new Holder or Holders. Upon surrender for registration of transfer of any Equipment Note, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of a like aggregate unpaid portion of the Principal Amount and of the same series. At the option of the Note Holder, Equipment Notes may be exchanged for other Equipment Notes of any authorized denominations of a like aggregate unpaid portion of the Principal Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note 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 Note Holder or such Holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of the amount of all payments of Principal Amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to have been paid on such new Equipment Note to the date on which interest shall have been paid on such old Equipment Note, and all payments of the Principal Amount marked on such new Equipment Note, as provided above, shall be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner Trustee shall be required to exchange any surrendered Equipment Notes as provided above during the ten-day period preceding the Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions of the Refunding Agreement applicable to Note Holders, and shall be deemed to have represented and warranted to the parties to the Refunding Trust Indenture 41 - 36 - Agreement as to the matters represented and warranted by the Subordination Agent in its capacity as the initial Holder of the Equipment Notes. Subject to compliance by the Note Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for transfer or exchange. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the Holder of such Equipment Note, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Principal Amount dated the same date and captioned as originally issued. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be reasonably required by them to save the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. If a bank or trust company with a net worth of $200,000,000 or more is the Holder of any such destroyed, lost or stolen Equipment Note, then the written indemnity of such Person, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Equipment Note. Subject to compliance by the Note Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Equipment Notes within 10 Business Days of the date of the written request therefor from the Note Holder. SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Note Holder for any registration of transfer or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes; provided, however, that none of the Lessee, the Owner Trustee, Trust Indenture 42 - 37 - the Indenture Trustee or the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment Notes. SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment Notes are subject to redemption as provided in this Section 2.10 and Section 2.11 and purchase as provided in Section 2.12. On the date on which Lessee is required pursuant to Section 11(a) of the Lease to make payment for an Event of Loss with respect to the Engine, all of the Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to, but not including, the date of redemption and all other amounts payable hereunder or under the Refunding Agreement to the Note Holders but without Make-Whole Amount, all in the order of priority specified in Section 3.02 hereof. SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any redemption of any Equipment Note nor any purchase by the Owner Trustee of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. No purchase of any Equipment Note may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Equipment Notes shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to be redeemed or purchased, at such Note Holder's address appearing in the Register. All notices of redemption or purchase shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that interest on such Equipment Notes shall cease to accrue on and after such redemption date, and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any Person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New York City time, on the redemption date in Trust Indenture 43 - 38 - immediately available funds the redemption price of the Equipment Notes to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid, the Equipment Notes to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption or purchase in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. If any Equipment Note called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Equipment Note as of such redemption date. SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.12, purchase all but not less than all of the Equipment Notes outstanding hereunder, and each Note Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Equipment Notes and except against Liens on such Equipment Notes arising by, through or under such Holder), all of the right, title and interest of such Note Holder in and to the Trust Indenture Estate, this Indenture and the Equipment Notes held by it, and such purchaser or its nominee shall assume all of such Holder's obligations under the Refunding Agreement and hereunder. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to, but not including, the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Refunding Agreement to the Holder thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default (and there is no Indenture Trustee Event), the purchase price thereof shall equal the price provided in the Trust Indenture 44 - 39 - preceding sentence plus the Make-Whole Amount, if any; provided further, that under no circumstances shall the Make-Whole Amount be payable by the Lessee. Such option to purchase the Equipment Notes may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Equipment Notes shall become irrevocable upon the fifteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Note Holders will comply with all the provisions of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes and charges required pursuant to Section 2.09 in connection with the issuance of such new Equipment Note shall be borne by the Owner Participant. SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance of its Equipment Notes of any Series, each Note Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II and III hereof. (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for the Senior Holder or Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Articles II and III hereof. Trust Indenture 45 - 40 - (c) As used in this Section 2.13, the term "Senior Holder" or "Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured Obligations in respect of Series A Equipment Notes have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes have been paid in full, the Note Holders of Series B until the Secured Obligations in respect of Series B Equipment Notes have been paid in full, (iii) after the Secured Obligations in respect of Series B Equipment Notes have been paid in full, the Note Holders of Series C until the Secured Obligations in respect of Series C Equipment Notes have been paid in full and (iv) after the Secured Obligations in respect of Series C Equipment Notes have been paid in full, the Note Holders of Series D until the Secured Obligations in respect of Series D Equipment Notes have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Certain Rent Distributions. Except as otherwise provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of Supplemental Rent, any payment received by the Indenture Trustee as contemplated by the first sentence of Section 4.03 hereof, and any payment received by the Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned Sublease shall be promptly distributed in the following order of priority: first, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount, and interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series A Equipment Notes shall be distributed to the Note Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Equipment Note bears to the aggregate amount of the payments then due under all Series A Equipment Notes; (ii) after giving effect to clause (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series B Equipment Notes shall Trust Indenture 46 - 41 - be distributed to the Note Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Equipment Note bears to the aggregate amount of the payments then due under all Series B Equipment Notes; (iii) after giving effect to clause (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series C Equipment Notes shall be distributed to the Note Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; (iv) after giving effect to clause (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series D Equipment Notes shall be distributed to the Note Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and (v) after giving effect to clause (iv) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Series E Equipment Notes shall be distributed to the Note Holders of Series E ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series E Equipment Note bears to the aggregate amount of the payments then due under all Series E Equipment Notes; and Trust Indenture 47 - 42 - second, the balance, if any, of such installment or payment remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 3.07 hereof until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "second", or (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of said Section 3.03, or (iii) the 180th day after receipt of such payment, in which event such balance shall be distributed as provided in this clause "second" without reference to this proviso. SECTION 3.02. Event of Loss and Replacement. (a) Any payment received by the Indenture Trustee with respect to the Engine as the result of an Event of Loss thereto shall be applied to the redemption of the Equipment Notes and to all other amounts payable hereunder by applying such funds in the following order of priority: first, to reimburse the Indenture Trustee for any reasonable out-of-pocket costs or expenses incurred in connection with such Event of Loss, second, to pay in full the aggregate amount of the payment or payments of unpaid Principal Amount, and unpaid interest and other amounts (as well as any interest on overdue Principal Amount, and to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due to the Note Holders under all Equipment Notes, all in the order of priority specified in clause "first" of Section 3.01 hereof, and third, if and to the extent required to be paid to the Lessee (or if directed by the Lessee, any Permitted Sublessee) in reimbursement of payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease, to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and otherwise as provided in clause "fourth" of Section 3.03 hereof; provided that, if a Replacement Engine is to be substituted for the Engine subject to such Event of Loss as provided in Section 11 of the Lease and Section 5.06 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trust Indenture 48 - 43 - Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate as security for the obligations of the Lessee under the Operative Documents and invested in accordance with the terms of Section 3.07 hereof and, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, such proceeds shall, to the extent payable to the Lessee under the Lease, be released to the Lessee (or if directed by the Lessee, any Permitted Sublessee) upon or in connection with the replacement thereof as provided in such Sections. (b) Any amounts received directly or indirectly from any governmental authority or insurer or other party pursuant to any provision of Section 11 or 12 of the Lease (other than as the result of an Event of Loss with respect to the Engine) shall be applied as provided in the applicable provisions of the Lease; provided, however, that to the extent that any portion of such amounts held for account of the Lessee are not at the time required to be paid to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Operative Documents and shall be invested in accordance with the terms of Section 3.07 hereof and at such time as the conditions specified in the Lease for payment of such amounts to the Lessee shall be fulfilled, such portion, and the net proceeds of any investment thereof, shall, unless theretofore applied in accordance with the provisions of the Lease and this Indenture, be paid to the Lessee to the extent provided in the Lease. SECTION 3.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and notwithstanding Section 2.05 hereof, all payments received and amounts held or realized by the Indenture Trustee after an Indenture Event of Default shall have occurred and be continuing or after the Indenture Trustee has given notice to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease or of the foreclosure of this Indenture, or after the Equipment Notes shall have become due and payable as provided herein, and all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such Indenture Event of Default shall be continuing, be promptly distributed by the Indenture Trustee in the following order of priority, without duplication: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for all amounts due to it pursuant to Section 6.07 hereof, plus any tax, expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or Trust Indenture 49 - 44 - charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 4.05(b) hereof) 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 reimburse the then existing or prior Note Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to the then existing or prior Note 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 one over any other, in accordance with the amount of the payment or payments made by each such then existing or prior Note Holder pursuant to said Section 5.03 and applicable (in the case of each such then existing Note Holder) to the Equipment Notes held by such existing Note Holder at the time of distribution by the Indenture Trustee; third, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be Trust Indenture 50 - 45 - required to pay in full the aggregate unpaid Principal Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Equipment Notes held by each Holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Equipment Notes held by each Holder Trust Indenture 51 - 46 - plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Equipment Notes held by all such Holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (v) after giving effect to paragraph (iv) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series E Equipment Notes, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series E Equipment Notes (other than Make-Whole Amount, if any) to the date of distribution, shall be distributed to the Note Holders of Series E, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series E Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder and thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series E Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and fourth, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement and the Lease. No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the acceleration of the Equipment Notes. SECTION 3.04. Certain Payments. (a) Any payments received by the Indenture Trustee for which provision as to the application thereof is made in the Lease shall be applied forthwith to the purpose for which such payment was made in accordance with or as otherwise provided by the terms of the Lease. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of Trust Indenture 52 - 47 - the fourth paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) Notwithstanding anything to the contrary contained in this Article III, any sums received by the Indenture Trustee that constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Further, and notwithstanding anything herein to the contrary, any sums received by the Indenture Trustee under the Lease or any Sublease Assignment as security for the obligations of the Lessee or the relevant Permitted Sublessee under the Operative Documents shall be applied only to such obligations or as otherwise provided in the Lease. SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04 hereof, any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture shall be distributed by the Indenture Trustee, unless otherwise agreed in writing, subject to Section 6.07 hereof (i) to the extent received or realized at any time prior to the payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the order of priority specified in Section 3.01 hereof, and (ii) to the extent received or realized at any time after payment in full of all obligations to the Note Holders secured by the Lien of this Indenture, in the following order of priority: first, to the extent payments or amounts described in clause "first" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "first" of Section 3.03 hereof, and second, in the manner provided in clause "fourth" of Section 3.03 hereof. 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 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 Trust Indenture 53 - 48 - pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account as may be specified pursuant to the Refunding Agreement. SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold moneys for security pursuant to Section 21(h) of the Lease shall be held in accordance with the terms of such Section; and the Indenture Trustee hereby agrees to perform the duties of the Owner Trustee under such Section. Except as provided in the preceding sentence, any amounts held by the Indenture Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease Assignment, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Specified Investments selected in writing in a timely manner by the Owner Trustee or, in the event the Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly provided in this Indenture or the Lease, any income realized as a result of any such investment and any payments by or on behalf of the Lessee pursuant to the Lease in respect of any losses or expenses, 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. ARTICLE IV COVENANTS OF TRUST COMPANY AND OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The Trust Company hereby covenants and agrees that it will not directly or indirectly create, incur, assume or Trust Indenture 54 - 49 - suffer to exist any Lessor's Lien attributable to it in its individual capacity with respect to any of the properties or assets of the Trust Indenture Estate and shall, at its own cost and expense promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Trust Company will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Equipment Notes and hereunder in accordance with the terms of the Equipment Notes and this Indenture and all amounts payable by it to the Note Holders under the Refunding Agreement and the other Operative Documents; (ii) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it with respect to any of the properties or assets of the Trust Indenture Estate, and shall, at its own cost and expense, promptly take such action as may be necessary duly to discharge any such Lessor's Lien, and the Owner Trustee will cause restitution to be made to the Trust Indenture Estate in the amount of any diminution of the value thereof as the result of any Lessor's Liens attributable to it; (iii) in the event an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Owner Trustee shall have actual knowledge of an Indenture Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; (iv) the Owner Trustee will furnish to the Indenture Trustee, 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 the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 12(f) of the Lease, to the extent that the same shall not have been furnished, or is not required to be furnished by the Lessee, to the Indenture Trustee pursuant to the Lease or otherwise; Trust Indenture 55 - 50 - (v) except as contemplated by the Operative Documents or with the consent of the Indenture Trustee acting in accordance with Article IX hereof, the Owner Trustee will not incur any indebtedness for borrowed money; and (vi) the Owner Trustee will not enter into any business or other activity other than the business of owning the Engine, the leasing thereof to the Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Refunding Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. Indenture Events 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 administrative or governmental body): (a) any Lease Event of Default shall occur and be continuing (other than a failure to pay when due any amount in respect of Excepted Payments); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, or interest on, any Equipment Note (other than as a result of a Lease Default) and such failure shall have continued unremedied for ten calendar days; or the failure of the Owner Trustee to pay when due any other amount due and payable under any Equipment Note or hereunder (other than as a result of a Lease Default) and such failure shall have continued unremedied for 15 calendar days after notice thereof being given to the Owner Trustee from the Indenture Trustee or any Note Holder; or (c) any Lessor's Lien required to be discharged by the Trust Company pursuant to Section 4.01(a) hereof or Section 13 of the Refunding Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding Agreement or any Lessor's Lien required to be discharged by the Owner Participant pursuant to Section 13 of the Refunding Agreement shall remain undischarged for a period of 30 calendar days after, as the case may be, an officer with responsibility for or familiarity with the transactions contemplated hereunder or under the other Operative Documents (or any Vice President) in the Corporate Trust Administration Department of the Trust Company or an officer of the Owner Participant with responsibility for or familiarity with the transactions contemplated hereunder and under the other Operative Docu- Trust Indenture 56 - 51 - ments (or any Vice President) shall have actual knowledge of such Lien; provided, that no Indenture Event of Default shall arise under this Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner Participant to observe or perform any covenant referred to in this Section 4.02(c) if the Lessee shall have discharged all Lessor's Liens required to be discharged by the Owner Trustee or the Owner Participant pursuant to such covenants and compensated the Indenture Trustee and the Trust Indenture Estate for all claims, losses and expenses arising from the failure of the Owner Trustee or the Owner Participant, as the case may be, to observe and perform any such covenant; or (d) any representation or warranty made by the Owner Participant, the Owner Trustee or the Trust Company herein or in the Refunding Agreement or by any Person (if any) guaranteeing or supporting the obligations of the Owner Participant under the Operative Documents or in any related guarantee or support agreement shall prove to have been false or incorrect when made in any respect materially adverse to the rights and interests of the Note Holders; and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected as of a day within 30 calendar days following notice thereof being given to the Owner Participant, the Owner Trustee, the Trust Company or such Person (if any), as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; or (e) any failure of the Owner Trustee to observe or perform any of its covenants or agreements in the fourth paragraph following the Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner Participant or the Trust Company to observe or perform any of its respective covenants in Section 9(b)(11), 10 or 14 of the Refunding Agreement; or (f) except as provided in the following paragraph (j), any failure by the Owner Trustee or the Trust Company to observe or perform any other covenant or obligation of the Owner Trustee contained in this Indenture or in the Refunding Agreement or any failure by the Owner Participant to observe or perform any other covenant or obligation of the Owner Participant contained in the Refunding Agreement or any failure of any Person (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents to observe or perform any covenant or obligation of such Person contained in any such guarantee or support agreement, which failure, in any case and either Trust Indenture 57 - 52 - individually or together with other then existing failures, shall have a material adverse effect on the rights and interests of the Indenture Trustee or any Note Holder and is not remedied within a period of 45 calendar days following notice being given to the Owner Trustee, the Owner Participant or such Person, as the case may be, by the Indenture Trustee or a Majority in Interest of Note Holders; 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents shall (i) be unable to pay its debts generally as they become due within the meaning of the Bankruptcy Code, (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 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 (if any) that may guarantee or support the obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, a custodian, receiver, trustee or other officer with similar powers with respect to it 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 such Person, as the case may be; or (i) any petition for any relief specified in the foregoing paragraph (h) 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 Person (if any) that may guarantee or support the Trust Indenture 58 - 53 - obligations of an Owner Participant not originally party to the Refunding Agreement under the Operative Documents, as the case may be, and such petition shall not be dismissed within 60 days; or (j) at any time when the Engine shall be registered in a jurisdiction outside the United States, the Owner Trustee, the Trust Company or the Owner Participant shall breach any covenant as may be agreed upon pursuant to Section 11 of the Refunding Agreement as the result of which the Lien of this Indenture shall cease to be a valid and duly perfected Lien on the Trust Indenture Estate. SECTION 4.03. Certain Rights. In the event of any default by the Lessee in the payment of any installment of Basic Rent due under the Lease, the Owner Participant may, within ten calendar days (or such longer period ending on the second day after the expiry of the applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, a sum equal to the amount of all (but not less than all) of the Principal Amount and interest as shall then (without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on the Equipment Notes. In the event of any default by the Lessee in any obligation under the Lease other than the payment of Basic Rent, if such default can be remedied by the payment of money and the Owner Trustee shall have been furnished by the Owner Participant with all funds necessary for remedying such default, the Owner Participant may, within fifteen calendar days (or such longer period ending on the second day after the expiry of any applicable grace period specified in the Lease with respect to such default) after notice from the Indenture Trustee or the Lessee of such default, without the consent or concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) of the Lease to perform such obligation on behalf of the Lessee. 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 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 due and payable under the Equipment Notes or hereunder, and (b) any timely performance by the Owner Trustee of any obligation of the Lessee under the 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 default by the Trust Indenture 59 - 54 - Lessee under the Lease to the same extent that like performance by the Lessee itself would have remedied such default (but any such payment or performance shall not relieve the Lessee of its duty to pay all Rent and perform all of its obligations pursuant to the Lease). If, on the basis specified in the preceding sentence, such Lease Event of Default shall have been remedied, then any declaration pursuant to the Lease that the Lease is in default, and any declaration pursuant to this Indenture that the Equipment Notes are due and payable or that an Indenture Event of Default exists hereunder, based upon such Lease Event of Default, shall be deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the case may be, shall (to the extent of any such payments made by it) be subrogated to the rights of the Note Holders hereunder to receive such payment of Rent from the Indenture Trustee (and the payment of interest on account of such Rent being overdue), and shall be entitled, so long as no other Indenture Default or Indenture Event of Default shall have occurred and be continuing, to receive, subject to the terms 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 and obtaining and enforcing a judgment against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee or by demanding Excepted Payments or Excepted Rights; provided, however, 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 hereof; and provided, further, that (x) this Section 4.03 shall not apply with respect to any default in the payment of Basic Rent due under the Lease, if the Lessee itself shall have theretofore failed to pay Basic Rent in the manner required under the Lease (after giving effect to any applicable grace period) as to (i) each of the three Basic Rent Payment Dates immediately preceding the date of such default or (ii) in the aggregate more than six Basic 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 the 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 12-month period immediately preceding the Trust Indenture 60 - 55 - 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 shall have not been reimbursed by the Lessee or any Permitted Sublessee themselves to the Owner Trustee for distribution to the Owner Participant) an amount in excess of $3,500,000, and (z) neither the Owner Trustee nor the Owner Participant shall (without the prior written consent of a Majority in Interest of Note Holders) have the right to cure any Lease Default or 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, and if the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture Trustee may (subject to the rights of the Owner Participant or the Owner Trustee to cure any such Indenture Event of Default set forth in Section 4.03 hereof and the obligations of the Indenture Trustee set forth in this Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a Majority in Interest of Note Holders, exercise any and all of the remedies pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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 but, in the case of the Engine, only as permitted by Section 18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and the Lessee and all Persons claiming under any of them or wholly or partly therefrom; provided, however, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant ten days' prior written notice of the initial exercise of such remedies by the Indenture Trustee under the Lease (if not stayed or otherwise precluded by applicable law from giving such notice); provided, further, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Engine. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Engine available to it, even though it shall not have taken possession of the Engine and shall not have possession thereof at the time of such sale. Trust Indenture 61 - 56 - Anything in this Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder if there shall have occurred or be continuing a Lease Event of Default unless the Indenture Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 18 of the Lease to terminate the Lease or take possession and/or sell the Engine; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person (unless the Indenture Trustee is stayed or otherwise precluded by applicable law from giving such notice). In the event that the applicability of Section 1110 of the Bankruptcy Code to the Engine is being contested by the Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any right or remedy of the Indenture Trustee hereunder) to participate in such proceedings. The foregoing shall not preclude the Indenture Trustee from notifying any Permitted Sublessee that payments under any Assigned Sublease are to be made directly to it pursuant to the terms of the relevant Sublease Assignment, or, except as expressly provided above, from exercising its rights or remedies hereunder and under the other Operative Documents. For the avoidance of doubt, it is expressly understood and agreed, subject only to the immediately preceding paragraph, that the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under Trust Indenture 62 - 57 - no circumstance prevent the Indenture Trustee from otherwise exercising all of its rights, powers and remedies under this Indenture, including without limitation this Article IV. (b) If an Indenture Event of Default referred to in clause (g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred, then and in every such case the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest and all other amounts due thereunder and hereunder, shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not specified in Section 4.04(b) hereof shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Note Holders), subject to Section 4.03 hereof, at any time, by written notice or notices to the Owner Trustee, declare the unpaid Principal Amount of all Equipment Notes to be due and payable, whereupon the unpaid Principal Amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon and all other amounts due thereunder and hereunder, shall immediately become due and payable without presentment, demand, protest or further notice, all of which are hereby waived. (d) Sections 4.04(b) and (c), however, are subject to the condition that, if at any time after the Principal Amount of the Equipment Notes shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Equipment Notes and all other amounts payable under the Equipment Notes (except the Principal Amount of the Equipment Notes 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 Note Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Indenture Default or Indenture Event of Default or impair any right consequent thereon. Any acceleration pursuant to Sections 4.04(b) and (c) shall be automatically rescinded and any related declaration of an Indenture Event of Default annulled in the event that the Owner Trustee or the Owner Participant, as the case may be, shall Trust Indenture 63 - 58 - have cured, in accordance with Section 4.03, the Indenture Event of Default that resulted in such acceleration. No Make-Whole Amount shall become payable on the Equipment Notes as a result of any acceleration under Section 4.04(b) or 4.04(c). (e) Each Note Holder shall be entitled, at any sale pursuant to Section 18 of the Lease, to credit against any purchase price bid at such sale by such Note Holder all or any part of the unpaid obligations owing to such Note Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner Participant may be a cash purchaser at any such sale. (f) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any property in the Trust Indenture Estate or take any action with respect to any property in the Trust Indenture Estate so acquired by it if such acquisition or action would cause any trust created pursuant to the Trust Agreement to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. Return of the Engine, etc. (a) Subject to the rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof and unless the Owner Participant shall have theretofore purchased the Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall have occurred and be continuing and the Equipment Notes shall have been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, 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 designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate; provided that the Indenture Trustee shall at the time be entitled to obtain such possession under Section 4.04(a) and the other applicable provisions of this Indenture. 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 to the fullest extent it may lawfully do so, and (ii) to the extent permitted by law, pursue Trust Indenture 64 - 59 - all or part of the Trust Indenture Estate wherever it may be found (but not in violation of Section 10.05 hereof or of the Lease) and may enter any of the premises of the Lessee wherever such Trust Indenture Estate may be or be supposed to be and search for and take possession of and remove the same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper (it being understood and agreed that the provisions hereof shall not be construed so as to expand the obligations of the Lessee under the Lease, including Section 16 thereof). In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business (without limiting the express provisions of Section 5.10 hereof) and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof, except Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to the exercise of its remedies under this Article IV, to the extent permitted by applicable law, be entitled to the appointment of a receiver for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. 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 Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments which the Indenture Trustee may be required or Trust Indenture 65 - 60 - may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Trust 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 that 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. 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 pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 4.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Note Holder 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 or such Note Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Note Holders shall continue as if no such proceedings had been instituted. SECTION 4.08. Waiver of Past Indenture Defaults. Upon written instructions from a Majority in Interest of Note Holders, the Indenture Trustee shall waive any past Indenture Default hereunder and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right Trust Indenture 66 - 61 - consequent thereon; provided, however, that in the absence of written instructions from the Holders of all Equipment Notes then outstanding, the Indenture Trustee shall not waive any Indenture Default (i) in the payment of the Principal Amount of or interest on any Equipment Note then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Note Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. Notice of Indenture Event of Default. In the event the Indenture Trustee shall have knowledge of an Indenture Event of Default, or shall have knowledge of an Indenture Default arising either from a failure to pay Rent or a Lease Default of the type referred to in the second sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice in the manner provided by Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to any Indenture Event of Default or Indenture Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the provisions of Section 5.03 hereof, if the Indenture Trustee shall not have received instructions as above provided within 20 calendar days after mailing notice of such Indenture Default or Indenture Event of Default to the Note 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 such Indenture Default or Indenture Event of Default as it shall determine to be advisable and in the best interests of the Note Holders and shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of its own affairs; provided that the Indenture Trustee may not sell the Engine or any part thereof without the consent of a Majority in Interest of Note Holders. In the event the Indenture Trustee shall at any time elect to foreclose or otherwise enforce this Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the case of any such party) not stayed or otherwise prohibited by applicable law, the Owner Participant, the Note Holders, the Owner Trustee and Trust Indenture 67 - 62 - the Lessee. For all purposes of this Indenture, in the absence of actual knowledge on the part of an officer in the Corporate Trust Office, in the case of the Indenture Trustee, or its Corporate Trust Administration 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 an Indenture Event of Default (except, in the case of the Indenture Trustee, the failure of the Lessee to pay any installment of Rent when due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of an Indenture Default for purposes of the first sentence of this Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the Indenture Trustee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Note 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 to take such other action hereunder or under any other Indenture Document or in respect of any part or all of the Trust Indenture Estate as shall be specified in such instructions; (ii) take such action with respect to, or to preserve or protect, the Trust Indenture Estate (including the discharge of Liens) as shall be specified in such instructions and as are consistent with this Indenture; and (iii) take such other action in respect of the subject matter of this Indenture as is consistent with the terms hereof and of the other Indenture Documents. 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 Trust Indenture Estate as may be specified from time to time in written instructions of a Majority in Interest of Note 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); provided that, notwithstanding the foregoing, the Indenture Trustee may, but shall not be obligated to, execute and file or cause to be filed any financing statement which it from time to time deems appropriate or any continuation statement that the Lessee, in discharge of its obligations under Section 3(v) of the Refunding Agreement or any other Operative Document, may so request. Notwithstanding the foregoing or anything in this Indenture to the contrary, the Indenture Trustee may, on the advice of its counsel and without the consent or approval of any Note Holder, approve any counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding Trust Indenture 68 - 63 - Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by such counsel. None of the Owner Participant, the Owner Trustee or the Lessee have any liability for the failure of the Indenture Trustee to discharge its obligations hereunder. SECTION 5.03. Indemnification. The Indenture Trustee shall not be required to take any action or refrain from taking any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof unless the Indenture Trustee shall have been indemnified against any liability, cost or expense (including counsel fees) that may be incurred in connection therewith. The Indenture Trustee shall not be under any obligation to take any action under this Indenture 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 hereof, 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 of the other Indenture Documents or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Indenture or Instructions. The Indenture Trustee shall not have any duty or obligation to maintain, use, operate, store, lease, control, manage, sell, dispose of, insure or otherwise deal with the Engine or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture or any Indenture Document or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions from Note Holders as provided in this Indenture and no implied duties or obligations shall be read into this Indenture against the Indenture Trustee. It is understood that, as between the Indenture Trustee and the Note Holders, with respect to all matters left to the discretion of the Indenture Trustee hereunder, or under any Indenture Document, the Indenture Trustee shall have the right to request written instructions from the Note Holders and, pending receipt of such instructions from the Note Holders or the required percentage thereof as provided herein, the Indenture Trustee shall not be required to take any such discretionary action hereunder; provided, however, that if the Indenture Trustee shall request written instructions pursuant to this Section 5.04, it will use reasonable efforts to seek and Trust Indenture 69 - 64 - obtain such instructions promptly so as not unreasonably to delay the proposed action of Lessee in respect of which the instructions are sought. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article VII hereof or any other Operative Document) promptly take such action as may be necessary to duly discharge all Lenders' Liens on any part of the Trust Indenture Estate attributable to it in its individual capacity. SECTION 5.05. No Action Except Under Lease, Refunding Agreement, 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, or place Liens on, the Engine or any other part of the Trust Indenture Estate except (i) as required or permitted by the terms of the Lease or the Refunding Agreement, or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Indenture and in accordance with the terms hereof. SECTION 5.06. Replacement Engine. (a) If at any time and from time to time, the Engine may, or may be required to, be replaced under Section 6(a) or 11(a) of the Lease by a Replacement Engine, as the case may be, in accordance with the provisions of this Section 5.06 and the provisions of said Sections of the Lease, the Owner Trustee shall, at such time or times, but subject to compliance with the conditions to such replacement set forth in the Lease, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the 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: (1) A written request from the Owner Trustee, requesting such release and specifically describing the Engine so to be released and the Replacement Engine. (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. [Intentionally reserved] B. With respect to the replacement of the Engine: (i) a description of the Engine which shall be identified by manufacturer's name and serial number; Trust Indenture 70 - 65 - (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) to be received as consideration for the Engine; (iii) that on the date of the Indenture Supplement relating to the Replacement Engine the Owner Trustee will hold title to the Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement Engine will on such date be in good operating condition, and that the Replacement Engine is the same or an improved model as the Engine; (iv) the value, remaining useful life and utility of the Replacement Engine as of the date of such certificate (which value, remaining useful life and utility shall not be less than the then value, remaining useful life and utility of the Engine, assuming the Engine was in the condition and repair required to be maintained under the Lease (but without regard to hours and cycles until overhaul)); (v) that no Lease Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of the Replacement Engine; and (vi) that each of the conditions specified in Section 11(b) of the Lease with respect to the Replacement Engine have been satisfied. (3) The appropriate instrument or instruments (i) transferring to the Owner Trustee title to the Replacement Engine to be received as consideration for the Engine, (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Engine (if any) (which warranties may be assigned by the Owner Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting such Replacement Engine to the Lien of this Indenture and subjecting to any relevant Assigned Sublease and Sublease Assignment, including, without limitation, an Indenture Supplement. (4) [Intentionally reserved] (5) The opinion of counsel to the Lessee, satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property that have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed Trust Indenture 71 - 66 - of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; (ii) the Replacement Engine has been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting the Replacement Engine to the Lien of this Indenture and the Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the perfection and the effect of perfection or non-perfection of a security interest in the Engine or the Lien of this Indenture, and no further action, filing or recording of any document is necessary in order to establish and perfect, in the United States and, if the establishment of title and perfection and the effect of perfection or non-perfection of a security interest in such Replacement Engine or the Lien of this Indenture are governed by the laws of a jurisdiction other than the United States, in such jurisdiction, the legal title to such Replacement Engine and the Lien of this Indenture on such Replacement Engine; and (iii) the Owner Trustee and the Indenture Trustee (as assignee of the Owner Trustee's rights under the Lease) shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the Replacement Engine to the same extent as with respect to the Engine prior to such replacement. (b) Upon the acquisition by the Owner Trustee of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act become subject to the Lien of this Indenture, and to the extent the Owner Trustee is divested of title to or other interest in any Part under and as provided in the Lease, the same shall automatically and without further act cease to be subject to the Lien of this Indenture. The Indenture Trustee shall at any time and from time to time at the request of the Lessee execute an appropriate written instrument or instruments to confirm the release of any Part from the Lien of this Indenture as provided in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an Officers' Certificate of Lessee confirming such release is authorized by the terms hereof. SECTION 5.07. Indenture Supplements for Replacements. In the event of the substitution of a Replacement Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Note Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set Trust Indenture 72 - 67 - forth in Section 11 of the Lease, to execute and deliver the appropriate instruments as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted Sublessee) an appropriate instrument releasing the Engine being replaced from the Lien of this Indenture. SECTION 5.08. Effect of Replacement. In the event of the substitution of a Replacement Engine as contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions of this Indenture relating to the Engine being replaced shall be applicable to such Replacement Engine with the same force and effect as if such Replacement Engine was the same engine as the Engine being replaced. SECTION 5.09. Notices, etc. Where this Indenture expressly provides for notice to Note Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Note Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Note Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Note Holder shall affect the sufficiency of such notice with respect to other Note Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Note Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Note Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provisions of this Indenture, including the Granting Clause, but subject always to the final paragraph of this Section 5.10, the following rights shall be reserved to the Owner Trustee or Owner Participant, as the case may be (as separate and independent rights) to the extent described herein: (a) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Trust Indenture 73 - 68 - Excepted Payments from the Lessee, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excepted Payment and seek legal or equitable remedies to require the Lessee to maintain the insurance coverage referred to in Section 12 of the Lease (or the comparable provisions of any Assigned Sublease) and such specific performance of the covenants of the Lessee under the Lease (or the comparable provisions of any Assigned Sublease) relating to the protection, maintenance, possession and use of the Engine; provided, that the rights referred to in this clause (a) shall not be deemed to include the exercise of any remedies provided for in Section 18 of the Lease (or the comparable provisions of any Assigned Sublease) other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by the Lessee of such amounts included in Excepted Payments or performance by the Lessee of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of the Lessee; (b) (i) the Indenture Trustee shall not, without the consent of the Owner Trustee, enter into, execute and deliver amendments or modifications in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment and (ii) unless an Indenture Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be materially diminished or impaired thereby, (A) enter into, execute and deliver waivers or consents in respect of any of the provisions of the Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any waivers or consents in respect of any of the provisions of Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excepted Payment or (z) the amount or timing of any amounts payable by the Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default hereunder, would be distributable to the Owner Trustee under Article III hereof; Trust Indenture 74 - 69 - (c) at all times whether or not an Indenture Event of Default has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from the Lessee or any Permitted Sublessee 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 pursuant to any Operative Document (including pursuant to Section 10 of the Lease), (ii) to exercise inspection rights pursuant to Section 7 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 12 of the Lease specifically confers on the Owner Participant and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of the Owner Trustee under Section 21(d) of the Lease and to give notices of default under Section 17 of the Lease; and (d) except as expressly provided to the contrary in clauses (a), (b) and (c) above, so long as no Indenture Event of Default has occurred and is continuing, all rights (including options, elections, determinations, consents, approvals, waivers and the giving of notices) of the Owner Trustee and the Owner Participant under the Lease shall be exercised by the Owner Trustee and/or the Owner Participant, as the case may be, to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder; provided that the foregoing shall not, nor shall any other provision of this Section 5.10, limit (A) any rights separately and expressly granted to the Indenture Trustee or any Note Holder under the Lease or the other Operative Documents (including, without limitation, Section 15 of the Refunding Agreement) or (B) the right of the Indenture Trustee or any Note Holder to receive any funds to be delivered to the Owner Trustee under the Lease (except with respect to Excepted Payments). Notwithstanding the foregoing provisions of this Section 5.10, but subject always to Section 10.05 hereof and to the rights of the Owner Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) demand, collect, sue for or otherwise receive and enforce the payment of all Rent due and payable under the Lease (other than any thereof constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be in default under Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than in connection with Excepted Payments) and in Article IV hereof. Trust Indenture 75 - 70 - SECTION 5.11. Evidence of Action Taken by Note Holder. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Note Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Note Holders in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner Trustee if made in the manner provided in this Indenture. SECTION 5.12. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 5.11 hereof, of the taking of any action by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action, any Note Holder which has consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding an Equipment Note, revoke such action so far as concerns such Equipment Note. Except as aforesaid any such action taken by the Note Holder shall be conclusive and binding upon such Note Holder and upon all future Note Holders and owners of such Equipment Note and of any Equipment Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Equipment Note. Any action taken by the Note Holders of the percentage in aggregate Principal Amount of the Equipment Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Note Holders. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in its individual capacity accepts the trust hereby created and agrees to perform the same but only upon the terms of this Indenture. The Indenture Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the Owner Participant to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof; and neither the Trust Company nor the Indenture Trustee in its individual capacity shall be answerable or accountable under any circumstances, except for its own willful misconduct or Trust Indenture 76 - 71 - gross negligence (other than for the handling of funds, for which the standard of accountability shall be negligence), or as provided in the fourth sentence of Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and except for liabilities that may result, in the case of the Trust Company, from the inaccuracy of any representation or warranty of the Trust Company in the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the failure to perform any covenant of the Trust Company pursuant to Section 4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of the Indenture Trustee, from the inaccuracy of any representation or warranty, or failure to perform any covenant, of the Indenture Trustee made in its individual capacity herein, in the Refunding Agreement or in any other document. None of the Owner Participant, the Trust Company or the Indenture Trustee shall be liable for any action or inaction of any other one of such parties, except, in the case of the Owner Participant, for any action or omission of the Owner Trustee performed or omitted on the instructions of the Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note Holders for any purpose. 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, 5.02 or 9.01 hereof, and except as provided in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any recording or filing of the Lease or of this Indenture or any other document, or to see to the maintenance of any such recording or filing, (ii) to see to any insurance on the Engine, 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 Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Lessee or (v) to inspect the Engine at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease or any of the Permitted Sublessee's covenants under any Assigned Sublease with respect to the Engine. SECTION 6.03. No Representations or Warranties as to Engine or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH Trust Indenture 77 - 72 - SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE ENGINE 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 ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for the Engine the Owner Trustee shall have received whatever interest in the Engine was conveyed to it under the Warranty Bill of Sale subject to the rights of the parties to the Indenture Documents and (ii) the Engine shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company nor the Indenture Trustee makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Equipment Notes or any Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company and the Indenture Trustee in its individual capacity or as Indenture Trustee made under this Indenture or in the other Operative Documents. SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to any Note Holder, the Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by law, 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 Section 3.07 hereof) 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 any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors of any party to the Refunding Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Equipment Notes outstanding as of any date, the Owner Trustee may for all purposes hereof Trust Indenture 78 - 73 - 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, but in the case of any such certificate, the Owner Trustee and the Indenture Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third sentence of Section 2.04(a)) through agents or attorneys and shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care hereunder. The Indenture Trustee may, at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled Persons. SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts hereunder solely as trustee under the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein. SECTION 6.07. Compensation. The Indenture Trustee shall be entitled to reasonable compensation (which compensation shall not (to the extent permitted by applicable law) be limited by any provision of law in regard to the compensation of a trustee of an express trust), including expenses, advances and disbursements, for all services rendered hereunder, and shall have a first priority claim (prior to the Note Holders) on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no Trust Indenture 79 - 74 - right against any Note Holder or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. SECTION 6.08. May Become Note Holder. Each of the institutions acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder and have all rights and benefits of a Note 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, 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 individually 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 but except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants solely from the Trust Estate, 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, and reasonable out-of-pocket 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 and as trustee) from and after the Restatement Date (whether or not also agreed to be indemnified against by any other Person under any other document) in any way relating Trust Indenture 80 - 75 - to or arising out of this Indenture, the Trust Agreement, the Equipment Notes, the other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of the Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (i) in the case of willful misconduct or gross negligence (or negligence in the case of handling of funds) 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 made in the Refunding Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the Indenture Trustee, in its individual capacity and as Indenture Trustee, and its successors, permitted assigns, agents and servants thereunder; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Section 7.01 for any amount indemnified against by the Lessee under the Lease without first (but only to the extent not stayed or otherwise prevented by operation of law) making demand on the Lessee for payment of such amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any claim for which it may seek indemnity. The Lessee shall be entitled to defend any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this 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 Trust Indenture Estate. The indemnities contained in this Section 7.01 shall survive the termination of this Indenture. SECTION 7.02. Exculpation and Release of Liability. Without in any way affecting the limitations on liability set forth in the Operative Documents, the Indenture Trustee, and each Note Holder by accepting any Equipment Note hereunder, hereby acknowledge and agree that none of the Trust Company, the Owner Participant or any director, officer, employee, stockholder, agent or affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity Persons") shall have any obligation, duty or liability of any kind whatsoever to the Indenture Trustee or Trust Indenture 81 - 76 - any such Note Holder in connection with the exercise by any Exculpated Equity Person of any rights of the Owner Trustee or the taking of any action or the failure to take any action by any Exculpated Equity Person in connection with any rights of the Owner Trustee under this Indenture or the Lease, and each such Note Holder hereby waives and releases, to the extent permitted by applicable law, each Exculpated Equity Person of any and all such obligations, duties or liabilities. ARTICLE VIII SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES SECTION 8.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Trust Company pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee and to each Note Holder. SECTION 8.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 calendar days' prior written notice to the Owner Trustee, the Owner Participant, each Note Holder and the Lessee, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Note Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, the Lessee and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note 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 Note Holders may appoint, with the consent of the Lessee, a successor Indenture Trustee by an instrument signed by such Holders (whose fees shall be reasonably acceptable to the Lessee). If a successor Indenture Trustee shall not have been appointed within 30 calendar days after such notice of resignation or removal, the Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner Participant 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. Trust Indenture 82 - 77 - (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee and to the predecessor Indenture Trustee an instrument accepting and assuming such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Indenture Trustee, without further act, shall become vested with and bound by all the estates, properties, rights, powers, duties and obligations of the predecessor Indenture Trustee hereunder and under the other Indenture Documents 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 moneys or other property then held by such predecessor Indenture Trustee hereunder, subject nevertheless to its claim provided for in Section 6.07 hereof. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having a combined capital and surplus of at least $200,000,000 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 8.02, be the Indenture Trustee under this Indenture without further act. Notwithstanding the foregoing, upon the request of the Owner Trustee or the Lessee, any such successor corporation referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the Lessee an instrument confirming its status as the Indenture Trustee hereunder and under the other Indenture Documents. 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 Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, Trust Indenture 83 - 78 - acting jointly with the Indenture Trustee, of all or any part of the Trust Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust 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 to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its, his or her attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, his or her behalf and in its, his or her name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, trusts, obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee 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 hereof. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; Trust Indenture 84 - 79 - (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or with respect to which it is hereby provided may be exercised by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 8.03, the powers of any additional trustee or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. Trust Indenture 85 - 80 - ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 9.01. Lease Amendments and Supplemental Indentures. (a) Except as otherwise provided in Section 5.10 hereof, and except with respect to Excepted Payments, the Owner Trustee agrees that it shall not enter into any amendment of or supplement to the Lease, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee acting on instructions of a Majority in Interest of Note Holders. Anything to the contrary contained in this Section 9.01 notwithstanding, without the necessity of the consent of any of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long as no Indenture Event of Default has occurred and is continuing, enter into amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such amendment would adversely affect the rights or exercise of remedies under Section 18 of the Lease) so long as such amendments, modifications and changes do not and would not (A) affect the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until after the payment in full of all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the value, utility or useful life of the Engine or (D) otherwise adversely affect the Note Holders in any material respect, and (iii) the Indenture Trustee may approve any Permitted Sublessee as provided in clause (c) of the definition of such term set forth in the Lease and may exercise the rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain rights and powers under the Lease to the exclusion of the Indenture Trustee and any Note Holder and without the consent of the Indenture Trustee or any Note Holder. The Indenture Trustee is hereby authorized to join in the execution of any supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trust Indenture 86 - 81 - Trustee's own rights, duties or immunities under this Indenture or otherwise, whether in its official or individual capacity. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed without the consent of the Note Holders notwithstanding any of the provisions of this Section 9.01. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees with the Note Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Indenture, the Lease, the Refunding Agreement or the other Indenture Documents, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Note Holders, or does not adversely affect the Note Holders in any material respect. Upon the written request of a Majority in Interest of Note Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each Holder of an affected Equipment Note then outstanding and of each Liquidity Provider, no such amendment of or supplement to this Indenture, the Lease, the Refunding Agreement or any other Indenture Document or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the definitions of "Indenture Event of Default", "Indenture Default", "Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Equipment Note, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce, modify or amend any indemnities in favor of the Note Holders, (iv) consent to any change in this Indenture or the Lease which would permit redemption of Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or any Sublease Trust Indenture 87 - 82 - Assignment, or consent to any assignment of any thereof, in either case releasing the Lessee (or Permitted Sublessee) from its obligations in respect of the payment of Basic Rent or Stipulated Loss Value for the Engine or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Note Holder for any of the following purposes: (i)(A) to cure any defect or inconsistency herein or in the Equipment Notes, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Note Holder in its capacity solely as Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Note Holders in its capacity solely as Note Holder or impose upon the Lessee any additional indemnification obligations; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture, the Engine or any Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Note Holders, or to surrender any rights or powers herein conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on the Equipment Notes any legend as may be required by law. (d) Without the consent of the Lessee no amendment or supplement to this Indenture or waiver or modification of the terms hereof shall adversely affect the Lessee in any material respect or impose upon the Lessee any additional indemnification obligations. Trust Indenture 88 - 83 - SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for all and any purposes. SECTION 9.03. Documents to Be Given to Trustee. The Indenture Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture referred to in Section 9.01 complies with the applicable provisions of this Indenture. SECTION 9.04. Notation on Notes in Respect of Supplemental Indentures. Equipment Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment Notes so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Equipment Notes then outstanding. SECTION 9.05. Trustees Protected. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of this Article IX affects adversely any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. SECTION 9.06. Documents Mailed to Note Holders. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to this Article IX, the Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in such quantities as will permit the Indenture Trustee to distribute one copy to each Note Holder, and the Indenture Trustee shall mail one such copy to each Note Holder), but the Trust Indenture 89 - 84 - failure of the Owner Trustee or the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. The Indenture Trustee will furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder to the extent that the same were not required to have been furnished to such Note Holder pursuant hereto or to the Lease. SECTION 9.07. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in this Article IX, no written request or consent of the Indenture Trustee, any Note Holder or the Owner Participant pursuant to this Article IX shall be required to enable the Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to the terms of the Lease to subject the Engine or other property thereto or to release the Engine or other property therefrom or to execute and deliver an Indenture Supplement, in each case pursuant to the terms hereof. SECTION 9.08. Notices to Liquidity Provider. Any request made to any Note Holder for consent to any amendment or supplement pursuant to this Article IX shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE X MISCELLANEOUS SECTION 10.01. Termination of Indenture. Upon payment in full of the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid interest on and other amounts then due with respect to the Equipment Notes and provided that there shall then be no other amounts then due to the Note Holders and the Indenture Trustee hereunder or under the Lease or the Refunding Agreement or otherwise secured hereby, the Lien of this Indenture shall be deemed discharged and the security interests in favor of the Indenture Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such Lien and the termination of such security interest in the Engine and release of the Indenture Documents 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 Trustee to give effect to such discharge, termination and release; provided, however, that this Indenture Trust Indenture 90 - 85 - and the trusts created hereby shall earlier terminate and this Indenture shall be of no further force or effect as expressly provided pursuant to Article X hereof or upon any sale or other final disposition by the Indenture Trustee of all property part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders. No Note Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Note Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Note Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 10.03. Sale of Engine by Indenture Trustee is Binding. Any sale or other conveyance of the Engine by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Note 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 such Holders in and to the Engine. 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, Lessee and Note Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any Person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note Holders, the Lessee and, with respect to any provisions hereof requiring payment to any Permitted Sublessee, such Permitted Sublessee, 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 the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, each of the Note Holders, the Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee that it will not take any action contrary to the Lessee's rights under the Lease, including the right of the Lessee to possession and use and quiet enjoyment of Trust Indenture 91 - 86 - the Engine, except in accordance with the provisions of the Lease. SECTION 10.06. Notices. Unless otherwise expressly specified herein, all notices, requests, demands, authorizations, directions, consents, waivers or documents required or permitted by the terms of this Indenture shall be in English and in writing, mailed by first-class registered or certified mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the Owner Participant at its address set forth in the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex: 99339; answerback: CTNB-HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner Participant, the Lessee or any Note 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 to the Refunding Agreement or in the Register. Whenever any notice in writing is required to be given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of the other of them, such notice shall be deemed and such requirement satisfied when such notice is received. 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. SECTION 10.08. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. SECTION 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 Trust Indenture 92 - 87 - and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Note Holder shall bind the successors and assigns of such Note Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. Each Note Holder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Refunding Agreement applicable to a Note Holder. 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. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate of any of them may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee or any Permitted Sublessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND THE EQUIPMENT NOTES ISSUED HEREUNDER 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 10.13. Section 1110. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the right to take possession of the Engine and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or of any other pertinent Operative Document, each such party agrees Trust Indenture 93 - 88 - that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. Trust Indenture 94 IN WITNESS WHEREOF, the parties hereto have caused this Indenture, as amended and restated, to be duly executed by their respective officers thereunto 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. WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By____________________________ Title: FLEET NATIONAL BANK, not in its individual capacity, except as expressly provided herein, but solely as Indenture Trustee By____________________________ Title: Trust Indenture 95 EXHIBIT A TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E3] TRUST INDENTURE SUPPLEMENT NO. _____ [GPA 1991 AWA-E3] TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991 (as amended, the "Trust Agreement") between Wilmington Trust Company and the Owner Participant named therein. W I T N E S S E T H : WHEREAS, the Trust Indenture and Security Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as amended and restated as of November 26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee and Fleet National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National Association, and The Connecticut National Bank), 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 Engine (such term and other defined terms in the Indenture being herein used with the same meanings) and any Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Engine or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Original Indenture, as supplemented by Trust Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July 29, 1993, subjected to the Lien of such Original Indenture the engine therein described, which Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the Federal Aviation Administration as one document on March 28, 1991 and assigned Conveyance No. M25990, which Amendment No. 1 has been duly recorded with the Federal Aviation Administration on April 30, 1992 and assigned Conveyance No. DD002564 and which Amendment No. 2 has been duly recorded with the Federal Aviation Administration on August 11, 1993 and assigned Conveyance No. F59684. 96 - 2 - WHEREAS(1), the Indenture relates to the Engine 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(2), the Owner Trustee has, as provided in the Indenture, heretofore executed and delivered to the Indenture Trustee [(3)] Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture one or more engines therein described, which Indenture Supplement(s) is (are) dated and has (have) been duly recorded with the Federal Aviation Administration as set forth below, to wit: Date Recordation Date FAA Document No. ---- ---------------- ---------------- NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Equipment Notes from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions contained in the Indenture and the Refunding Agreement and the Equipment Notes, for the benefit of the Note Holders, and the prompt payment of any and all amounts from time to time owing under the Refunding Agreement by the Owner Trustee, the Owner Participant and the Lessee in each case to the Note Holders 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 Equipment Notes by the Holders thereof, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt 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, - -------- (1) This recital is to be included only in the first Indenture Supplement (including the first Indenture Supplement filed with respect to the Indenture). (2) This recital not to be included in the first Indenture Supplement. (3) Insert appropriate number. Form of Trust Indenture Supplement 97 - 3 - transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Note Holders from time to time, in the trust created by the Indenture, a first priority security interest in and mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: AIRCRAFT ENGINE one aircraft engine having 750 or more rated takeoff horsepower or the equivalent thereof, identified as follows: Manufacturer's Manufacturer Model Serial Number ------------ ----- ------------- together with all equipment and accessories thereto belonging, by whomsoever manufactured, owned by the Owner Trustee and installed in or appurtenant to said aircraft engine. 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 security and benefit of the Note Holders from time to time, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement [GPA 1991 AWA-E3] No. 2 of even date herewith (other than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is Form of Trust Indenture Supplement 98 - 4 - hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Engine referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. Form of Trust Indenture Supplement 99 - 5 - IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers thereunto duly authorized on the day and year first above written. WILMINGTON TRUST COMPANY, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By____________________________ Title: Form of Trust Indenture Supplement 100 SCHEDULE I TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E3]
MATURITY PRINCIPAL AMOUNT DATE DEBT RATE ---------------- -------- --------- Series A $ 1,343,995 02-Jul-2009 6.85% Series B $ 503,996 02-Jan-2006 6.93% Series C $ 524,996 02-Jan-2004 6.86% Series D $ 489,995 02-Jul-2002 8.16% Series E $ 1,458,204 02-Jan-2004 10.50%
101 EQUIPMENT NOTES AMORTIZATION SERIES A Engine: V0019 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 102 - 2 - SERIES B Engine: V0019 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 103 - 3 - SERIES C Engine: V0019 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 104 - 4 - SERIES D Engine: V0019 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 105 - 5 - SERIES E Engine: V0019 Principal Amount Percentage of Original Repayment Date Amount to be Paid ---------------- ---------------------- 106 SCHEDULE II TO FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1991 AWA-E3] PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1A, dated November 26, 1996. 2. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1B, dated November 26, 1996. 3. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1C, dated November 26, 1996. 4. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1D, dated November 26, 1996. 5. Pass Through Trust Agreement, dated as of November 26, 1996, between America West Airlines, Inc., and Fleet National Bank, as supplemented by Trust Supplement No. 1996-1E, dated November 26, 1996. Schedule II -----END PRIVACY-ENHANCED MESSAGE-----